Big retailers report strong sales gains in January
In a surprise showing for a notoriously slow month, shoppers turned out at the nation’s malls in January, spending carefully but sufficiently to help retailers post solid sales and providing momentum heading into the spring selling season.
Retail sales increased 3.3% compared with January 2009, according to Thomson Reuters’ tally of 29 major chain stores, including department stores, discounters and apparel sellers. Analysts had predicted a 2.5% gain.
January is considered by many retail experts to be the least important month of the year as stores are mainly clearing out winter and holiday merchandise. The months ahead, when retailers roll out spring and summer apparel and accessories, will provide a better gauge of the industry’s pace of recovery, they said.
“It’s encouraging, looking at the January data, but the caveat is January and February are very low-volume months,” said Michael Niemira, chief economist at the International Council of Shopping Centers, who added that results were helped by an easy-to-beat January 2009. “But it does appear that the retail recovery is being sustained -- it’s now multiple months of pretty solid performance.”
Despite limited inventory levels and some adverse weather around the country, upscale and value-priced retailers reported gains last month. Industry watchers said sales were helped by gift card redemption, an improving economic picture and slowly growing optimism among consumers.
At Westfield Fashion Square in Sherman Oaks this week, shopper Susan Friedman said that after months of cutting back she was happy to be out buying Valentine’s Day chocolates and other gifts for her family.
“It’s a little bit of extravagance but not a lot,” the 50-year-old stay-at-home mom from Encino said. “I feel a little more confident than I did a year ago, when it was awful.”
Retail analysts caution that most shoppers still aren’t spending freely as they continue to worry about their jobs, mortgages and credit. Although an industry turnaround is underway, they say retailers should be prepared for periods of sluggish spending during the year.
“We believe the customer will shop, albeit more selectively, in 2010, focusing on value and the unique appeal of the product,” said Richard Jaffe, an analyst at Stifel, Nicolaus & Co., in a note to investors Thursday.
But for some consumers, good prices and attractive merchandise still aren’t enough to entice them to spend.
“I’m self-employed and my business is in the toilet,” said Teresa Deutsch, 52, a commercial fundraiser from Sunland. “I have two houses on the market -- one has been on the market for two years, and I haven’t even gotten an offer for it. The other is the house I’m living in now that I can’t afford to keep anymore. I’m one of those typical Americans.”
Deutsch said she spent frugally during the holidays, buying only merchandise that was on sale or for which she had coupons, and was still keeping a lid on purchases.
“I’m just trying to make it work, so for me, spending is very tight,” she said. “I just can’t seem to turn that corner.”
Strong January performers included Nordstrom Inc., which reported a 14% sales increase; TJX Cos., parent to the T.J. Maxx and Marshalls chains, where sales rose 12%; and Costco Wholesale Corp., with an 8% rise.
A notable performance came from Abercrombie & Fitch Co., which beat expectations with an 8% increase. It was the teen retailer’s first same-store sales increase since April 2008.
Although the teen and youth apparel sector showed signs of life after months of sluggishness, a few Southland players still suffered weak sales volume: Hot Topic Inc. of City of Industry saw sales fall 13.1%, and Wet Seal Inc. of Foot- hill Ranch posted a 3.7% drop.
Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health because it excludes the effects of store openings and closings. Wal-Mart Stores Inc., the world’s largest retailer, no longer reports sales on a monthly basis.
For February, Niemira said the shopping center council is predicting a 2% sales increase.
