Retailers And Weather: Who Survived The Brutal Start To 2014?

The Johnson Redbook Retail Sales Index on March 4 concluded that national chain-store sales fell 1.3 percent in February from the comparable period in January. The 1.3 percent decrease was steeper than the one percent decline analysts were expecting.The index also showed that seasonally adjusted sales for the month improved 2.9 percent from a year ago, but this too came in below analysts' expectations who were expecting a gain of 3.2 percent.Investors continue to debate which retailers are best positioned to emerge as a winner over their peers following two months of harsh weather seen across most of the United States. Pharmacy sector: Walgreens thrives, Rite Aid not that far behind Walgreens (NYSE: WAG) reported that sales in February rose five percent from $5.76 billion in February 2013 to $6.05 billion. Sales in comparable stores increased by 4.5 percent in February, while prescriptions filled at comparable stores increased by 2.2 percent in February.Walgreens offered no guidance on how weather affected February sales, but did note that severe weather negatively impacted its second quarter comparable store front-end sales by 0.6 percent and negatively impacted the quarter's prescriptions filled at comparable stores by 0.8 percentage point. Additionally, the company noted that it incurred incremental selling, general and administrative expenses throughout the quarter due to severe weather.Related: Congress Steps In To Investigate General Motors And NHTSARite Aid (NYSE: RAD) Target CIO First Executive To Leave Following Massive Data BreachThe Gap vs. L. Brands: battle of two specialty retailers On March 6, The Gap (NYSE: GPS) reported that total February sales declined three percent year-over-year to $929 million, while same-store sales fell seven percent in what management described as “clearly a difficult month.”Gap Brand comps were down 10 percent, Banana Republic comps were down seven percent and Old Navy comps were down six percent. The Gap noted that more than 450 stores were closed for at least one day during February due to weather, compared with 180 stores that were closed for at least one day in January.The Gap's management did not quantify its performance in non-storm affected regions, but did note that it was a pretty big differential.Paul Lejuez, consumer analyst at Wells Fargo wrote in a quick research note to clients on March 7 that The Gap's seven percent decline in February comps is steeper than his estimates of a decline of one percent to three percent. Additionally, March sales could be hurt by the shift of Easter into late April.Lejeuz lowered his first quarter EPS estimates from $0.72 to $0.69 and full year 2014 estimates from $3.02 to $2.99. The Gap is expected to report its first quarter results in May.Lejuez also noted that February's harsh weather hurt the Gap more than L. Brands (NYSE: LB), whose total February sales rose 5.23 percent year-over-year to $750 million and same-store sales rose two percent driven by February traffic up 20 percent.Brian Sozzi, CEO and Chief Equities Strategist at Belus Capital Advisors argues that investors could let Gap's poor performance slip as “weather was a major factor.” Sozzi explained in an email to Benzinga that Gap quickly sets out its spring products after the holiday shopping season ends and these products naturally aren't going to sell.Weather issues is not a structural issue, Sozzi argued, and added that cold weather has certainly added to the structural problems in specialty retail right now. Investors should hope that warmer weather arrives quickly, which would lead to opportunities for retailers to sell their products at non-discounted prices.Sozzi views the entire specialty apparel market being under “intense pressure” as “it's almost a land of permanent markdown.”