RetailSails

Those who were expecting retailers to carry their holiday momentum into the new year might be in for a disappointment. Four companies have reported January same-store sales so far, with three of them posting results that missed analyst expectations. Retailers were focused on clearance merchandise during the month, and continue to keep inventories very lean.

• Hot Topic reported a decrease of 11.2% in net sales and a 13.1% decline in overall same-store sales, compared to a 6.0% increase in the same period a year ago. This was the ninth consecutive month of negative comparable sales, and worse than the -12.1% analysts were expecting. Results at Torrid have been gradually improving and the chain saw a 5.7% comp gain in the month, but that was offset by a 17.4% plunge in same-store sales at Hot Topic stores.

• Zumiez reported an increase of 9.2% in net sales and a surprise 1.8% gain in same-store sales,  compared to a 14.8% decline a year ago. Analysts expected the company to post a 2.3% drop in comp sales – this is the second straight comparable sales gain after 15 consecutive months of negative same-store sales. Men’s, Accessories, and Boys were the strongest categories for the month, while the South and West were the strongest on a regional basis.

• Walgreens reported an increase of 2.7% in net sales and a 1.1% decrease in same-store sales, compared to a 0.4% gain in the year-ago period. This was much worse than the 2.2% comparable sales gain analysts expected and the 2nd straight decline after 12 positive months. Comparable pharmacy sales decreased 1.2% in January, while front-end same-store sales dropped by 1.0%. Prescriptions filled at comparable stores increased 2.7% and pharmacy sales accounted for 66.2% of total sales for the month.

• Rite Aid reported a decrease of 3.3% in net sales and a 2.1% decline in same-store sales compared to a 1.0% gain in the year-ago period. Comparable front-end and pharmacy sales were both down 2.1% in January. Prescription revenue accounted for 67.9% of drugstore sales, and prescriptions filled at comparable stores declined 1.1% percent from the prior-year period. This is the 8th consecutive month of negative same-store sales results for the company.

Nearly 30 major retailers will report their January results tomorrow, and we will have the full summary early in the morning. January is typically the lightest month in terms of volume, so we are not putting too much weight on the monthly results. We are, however, anxiously awaiting commentary from these companies on the outlook for the year ahead, as the majority of companies we cover will be reporting financial results for 2009 in the coming weeks.