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Retail Sales Sag, But Could Be Worse

With their confidence hitting new lows, shoppers remained focused on groceries and necessities in February, resulting in another month of sales declines for many merchants. But the figures weren't as dismal as in January, and Wal-Mart's gains far outpaced expectations.

In the sales results released Thursday, mall-based clothing chains including Wet Seal Inc. and Stage Stores Inc. continue to struggle with a sales slump, but the declines weren't as steep as Wall Street expected. At teen retailer The Buckle Inc., the same-store gain was more than double what Wall Street expected.

Same-store sales are sales at stores open at least a year and are a key measure of a retailer's health.

Nevertheless, analysts were quick to say that February's figures are unlikely to mark the beginning of a recovery among consumers, who are still grappling with massive job cuts, tight credit and plummeting stock portfolios.

"It's still ugly, but it's dressed up a little bit," said Ken Perkins, president of research company RetailMetrics LLC. "The macro headwinds outweigh fashion, newness and better weather and will continue to make it very difficult for retailers through the first half of the year."

Meanwhile, the number of new jobless claims and the total number of people receiving unemployment benefits both dropped unexpectedly last week, though they remain at elevated levels.

The Labor Department says the tally of initial requests for unemployment benefits fell to 639,000 from the previous week's figure of 670,000. Analysts expected a smaller drop to 650,000.

Wal-Mart Stores Inc. posted much stronger sales figures than analysts expected, saying its February same-store sales rose 5.1 percent. Analysts surveyed by Thomson Reuters, on average, expected a rise of 2.4 percent.

Groceries and health products remained the best sellers as shoppers turned to the world's largest retailer for necessities.

Limited Brands Inc., which operates Victoria's Secret and Bath and Body Works, posted a decline of 7 percent. Analysts expected a drop of 7.1 percent.

Stage Stores said same-store sales fell 8.6 percent, less than the 9.3 percent drop analysts expected.

Teen clothing retailer The Wet Seal Inc. posted a 6.6 percent decline because of lower sales at its name brand and Arden B locations. Analysts expected a 12 percent drop.

Among those that reported sales increases was teen retailer The Buckle Inc., which posted a 21 percent increase in February. Analysts had expected a 9 percent gain. And teen merchant Hot Topic Inc. had reported on Wednesday that its same-store sales rose 10.8 percent, more than double what analysts predicted, as teens snapped up accessories.

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