If there’s one trend that is obvious to us with same store sales, it’s that while the department store put up blockbuster comps – all the major retailers in the double digits – we simply did not see any meaningful earnings guidance increase to speak of. Macy’s took up guidance by 3 cents…but on an 11.7% comp? Gap was about the same in percentage terms, but still only 2% on an 8% comp. Neither show anywhere near the kind of leverage we should be seeing if this was, in fact, a real consumer-driven upside.
What the lack of earnings shows us is that this was driven by promotional activity. The market's reaction today shows that this is the consensus view -- and it's right. Many companies commented that the first part of the month was stronger than the second, which supports the premise that post-holiday markdown activity and giftcard redemption drove sales. We don’t have a problem with this by any means, as the worst thing the retailers could be faced with is bloated inventories as we head into Spring. It looks like most of them ameliorated that potential issue.
In addition, the months of February and March were very strong last year, and the softline space is up against its toughest compares of the year this spring. The last thing they want is high inventories headed into that event. Clean is good. But we still need the consumer to show up for business.
One of the key charts that we think matters today relates to performance by price point. This month is the first time in three years that ‘Good, Better, Best’ has been inverted such that Kohl’s came in on top, then Macy’s, then JWN. People will ask the question as to whether this means that JCP is losing share. And the answer is ‘Yes’, they are. But we struggle to find anyone on the planet who does not know.