‘99 Begins With Shopping Spree as Stores Post Gains in January
Consumers last month continued to eagerly snap up bargains, sending January’s retail sales to higher-than-expected levels and adding to optimism about the economy.
Analysts said Thursday they were encouraged by the strength of products not generally on sale last month: durable goods, consumer electronics, lingerie, accessories and even spring apparel.
“What surprised me was how strong everybody was; it just came in even stronger than what they hinted at it would look like,” said Michael Niemira, retail analyst for the Bank of Tokyo-Mitsubishi. “It just echoes the underlying strength in consumer spending.”
Bank of Tokyo-Mitsubishi’s retail chain store sales index for January put same-store sales up 8.3% over January 1998. Based on its survey of 85 chain stores, the bank rates last month as the strongest January since 1992.
Goldman Sachs, a New York investment bank, said same-store sales rose 7.4% in January. Same-store sales, or sales of stores open at least a year, are considered the best yardstick of retail strength.
Traditionally, January and February are slow months for most retailers. But sales last month benefited from shoppers’ growing tendency to bargain shop.
The strength of retail sales provided another indication that the economy has been able to avoid what some feared would be a ripple effect of continuing Asian economic woes.
Ford Motor Co., DaimlerChrysler and Toyota Motor Corp. reported strong January sales earlier this week. And the government reported Thursday that the economy grew at a strong 5.6% pace during the last three months of 1998.
Good January sales mean the retail industry is poised to follow suit with strong fourth-quarter and year-end reports, since many retailers end their fiscal years in January.
In general, shoppers in January revisited the divisions and stores they favored during the holiday season: housewares, consumer electronics, jewelry and specialty apparel.
That meant a boom for Gap Inc., which saw same-store sales rise 15% for its Gap, GapKids, Banana Republic and Old Navy stores; and Limited Inc., which posted same-store sales gains of 11% at stores that include both Limited and Express. Intimate Brands Inc., parent of Victoria’s Secret, saw an 11% rise in same-store sales.
Restoration Hardware Inc. took advantage of shoppers’ quest to nest and said same-store sales were up 10% over January 1998; Zale Corp. saw sales at its jewelry stores rise 8.8%.
And in another repeat of the Christmas shopping pattern, consumers once again headed back to the finer department stores and to discount stores, while mostly staying clear of the mid-level stores such as JCPenney and Sears.
Federated Department Stores Inc., which operates Bloomingdale’s and Macy’s among others, posted a 7.3% same-stores gain; Saks Inc., parent of Saks Fifth Avenue, was up 8% in stores open at least a year.
“That’s especially important because if you look at the department stores, they did not have the best holiday season,” said Richard Giss, of Deloitte & Touche’s retail services group in Los Angeles. “It sent them scrambling back to the boards to rethink their assortment of apparel and bring things more in line with consumers’ expectations.”
On the other end, J.C. Penney Co. saw same-store sales in its department stores division fall by 0.1%--excluding its strong-scoring Eckerd drugstores division, which posted a 13% same-store gain for January. Sears, Roebuck & Co. posted a 2.6% sales gain.
The large discount chains, on the other hand, saw January sales surge. Wal-Mart Stores Inc., the nation’s largest retailer, posted a 10.3% same-store sales gain. Target’s sales were up 9.6% over last January’s sales.
Another reason for strong January numbers could reflect the fact that consumers avoided apparel during the holidays, preferring consumer electronics, home furnishings and durable goods.
“There’s been a shift away from apparel and that has a flip effect on January--less returns and more [apparel] buying in January,” he said.
Other sales figures as compared with January 1998 for stores open at least a year:
* Dayton Hudson Corp., up 9.6%.
* May Department Stores Co., up 5.3%.
* Kmart Corp., up 8.5%.
* Gymboree, up 11%.
* Ann Taylor Stores Corp., up 13.3%.
* Eddie Bauer Inc., up 7%.
* CONTINUED STRENGTH: Factory, retail and jobless reports are latest proof of economy’s vitality. A1
