January's Top 5 Winners and Losers

Despite record-breaking winter storms that turned a trip to the mall into an adventure travel expedition, many retailers were able to generate strong same-store sales in January. Among the Top 5 winners, two retailers—Limited Brands and Zumiez—achieved double-digit same-store sales increases of 24% and 15.3%, respectively.

"Many retailers outperformed expectations on the street, and several are even raising earnings per share guidance," says J. Philip Leichliter, president of J. Philip Group LLC, which gathers information from multiple sources to track retailers' monthly performance. "The market remains strong despite problems looming in Egypt, based on earnings information from many companies," he adds.

Following on the heels of the strongest holiday shopping season in several years, the generally positive January numbers are an encouraging sign that the economic recovery may finally be gaining traction. However, retailers will face some significant challenges as 2011 progresses. If fuel prices rise as projected, the increases will cut directly into consumer spending power. Higher global prices for food, labor and cotton will force some retailers to choose between two unattractive options: shaving their margins or raising prices.

Following are the big Winners and Losers for January:

Top 5 Retailers (based on same-store sales for January 2011 compared to January 2010):

Limited Brands +24.0%
Zumiez             +15.3%
Wet Seal                      +6.2%
Walgreens                    +6.1%
Dillard's                        +6.0%

An encouraging sign for the industry is that the Top 5 includes several retail verticals. Limited owns Victoria's Secret and Bath & Body Works, Walgreens is a drugstore and general merchandise retailer and Dillard's is a traditional department store. Dillard's results were boosted by home and furniture sales that were significantly above trend, according to J. Philip Group.

Bottom 5 Retailers (based on same-store sales for January 2011 compared to January 2010):

American Eagle Outfitters         -6.0%
Abercrombie & Fitch                -4.0%
Cato Corp.                               -4.0% (tie)
Hot Topic                                 -3.3%
Duckwall-ALCO                      -1.9%
JCPenney                                 -1.2%
Stein Mart                                -1.2% (tie)

American Eagle Outfitters continues to struggle: the retailer also led the Bottom 5 Retailers list last month, with a same-store sales decrease of 11.0% in December. Sales at both JCPenney and Stein Mart were negatively affected by the severe winter weather, with lower sales in the northeast and southeast regions where the storms did the most damage, according to J. Philip Group.

Both Hot Topic and Duckwall-ALCO recently announced plans to close approximately 45 stores each. Hot Topic's store closings, slated to take place in Q1 of 2011, will be accompanied by a 14% reduction in its home office and field management positions. Duckwall-ALCO is closing 44 of its poorly performing limited-selection Duckwall stores as part of a reallocation of resources toward its broad-line ALCO stores.

For related content see: December's Top 5 and Bottom 5 Retailers

Store Closings: Hot Topic and Duckwall-ALCO to Shutter 45 Stores Each