Retail sales mixed, lower-priced stores up

By Brad Dorfman

CHICAGO (Reuters) - U.S. retailers posted mixed February sales results on Thursday as women's apparel continued to struggle and department store sales fell, while cash-strapped consumers favored outlets where they could save money.

"Retailers who had more of a value orientation ... tended to do relatively better against other retailers," said Michael Niemira, chief economist for the International Council of Shopping Centers.

Overall, retailers posted a 1.9 percent increase in sales at stores open at least a year, according to the ICSC.

But while that was above the council's forecast range of 0.5 to 1 percent, the increase was largely due to Wal-Mart Stores Inc (WMT.N) reporting better-than expected sales, Niemira said.

Wal-Mart, the world's largest retailer, said same-store sales at its U.S. stores open at least a year rose 2.6 percent in February, excluding fuel sales -- topping the average analyst estimate of 1.1 percent and sending its shares up 1.4 percent.

The company cited continued strength in grocery, health and wellness and entertainment, and said apparel sales improved.

"Wal-Mart's upside surprise is encouraging," Retail Metrics President Ken Perkins said. "They mention their apparel and electronics are up, so that's a good sign."

FEW POSITIVE SIGNS

Wal-Mart was one of the few retail stocks trading higher on Thursday, up 71 cents at $50.30 on the New York Stock Exchange.

The Standard & Poor's retail index .RLX was down nearly 3 percent.

U.S. consumers have had a bleak view of the economy, with sentiment dropping to recessionary levels in February, according to the Reuters/University of Michigan Surveys of Consumers.

Shoppers faced with rising food and gasoline prices as well as falling home values have cut back spending for several months while economists and investors debate whether the economy is in a full-blown recession or has just slowed down.

"It was definitely sort of a mixed bag, with the department stores not doing as well and the discounters outperforming, Wal-Mart in particular," said Sarah Henry, retail analyst at MFC Global, which has $240 billion in assets under management.

J.C. Penney Co Inc (JCP.N) posted a worse-than-expected 6.7 percent same-store sales decline, Nordstrom Inc (JWN.N) sales fell 5.8 percent and Kohl's Corp's (KSS.N) were down 3.8 percent.

LOW PRICE, HIGHER SALES