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Even with concern about lack of clearance merchandise, Jan was one of the more unanimously positive months we’ve seen in a while.  While we don’t want to get carried away with a month that only accounts for 7% of annual sales, the sequential acceleration across durations can’t be ignored.

The early read this morning on January sales is positive with results largely in-line to better than expectations.  Even with the month being of least importance in the grand scheme of things, there were notable earnings revisions to the upside coming from M, PLCE, GPS, ARO, AEO, ARO, KSS, SSI, and TJX.   Companies that outperformed during the Dec/Nov period appear have maintained momentum (even with tight inventory levels) while the underperformers continued to lag.

On the surface, results out of COST were better than expectations but below the surface there were some key moving parts.  Positive contribution from gas and FX helped to offset a negative 150-200bps hit from the calendar shift of the Super Bowl into February. BJ noted about the same 200bps negative impact from the Super Bowl. Unseasonably cold weather in the southwest was also cited as a headwind during the month.

Perhaps most interesting was a comment out of COST regarding food inflation/deflation. January marked a substantial change in the deflationary trend with the impact now measured at less than 1%.  This marks a substantial change from the mid-single digit deflation that has been impacting the food and consumables category for the past several months.

In a sign that sales day continues to diminish in its level of importance, another company (PLCE) announced that it’s going to discontinue reporting monthly sales – At least they’re going out with a bang, with a significant beat again this month on both sales and earnings.

January Recap:

Upside to expectations & guidance: M, PLCE, GPS, AEO, ARO, KSS, ROST, TJX, SSI

Upside to expectations: COST, ANF, DDS, LTD, ZUMZ, BJ, JWN, SKS

In-line: WTSLA, TGT, JCP

Downside to expectations: BKE, CATO

Downside to expectations & guidance: FRED, HOTT

Same Store Sales: (Little) January Looking Good - Total SSS

Same Store Sales: (Little) January Looking Good - 1yr SSS

Same Store Sales: (Little) January Looking Good - 2 yr SSS

Eric Levine