NEW YORK — The merger of Federated Department Stores Inc. and May Department Stores Co., combined with February same-store sales results that were higher than expected, jolted retail stocks higher last week.
The WWD Composite Stock Index finished the week up 3 percent to close at 1,175.53, a level not seen since late November. Comparatively, the Index closed at 1,141.65 the previous week. The S&P 500 inched up 0.9 percent to close at 1,222.12 from 1,211.37. The Dow Jones Industrial Average closed at 10,940.55, its highest level in four years.
The strength of February comps results took analysts by surprise and raised retailers’ expectations for the spring and summer seasons.
Affluent consumers continued to propel luxury stores, with Neiman Marcus, Nordstrom and Saks Fifth Avenue all posting same-store sales boosts of more than 7 percent.
And the specialty segment beat out department stores and mass retailers, with an average 6.9 percent comp increase for the month. “Clearly, the teen retailers posted the most eye-popping comps for the month,” (American Eagle was up 32.4 percent and Abercrombie & Fitch gained 19 percent, for example), Brian J. Tunick, a retail analyst with J.P. Morgan Chase & Co. said in a research note. “Gap and Old Navy, as well as Express appear to be the donors of some of that share.”
Joseph Teklits, a retail analyst with Wachovia Capital Markets LLC, noted that Gap, Old Navy and Express didn’t just miss out on a strong sales month, but a record-setting one.
“February’s 12.3 percent increase was the teen subsector’s best monthly result in five years,” Teklits said in a research report on Friday. “Teen retail in February accelerated to a level that was almost triple its [fiscal year] 2004 average increase.”