Retailers post strong January sales despite snow
Friday, February 4, 2011
Retailers stood their ground last month in the long-running battle between shopping and snow, according to data released Thursday.
Sales at about 30 of the nation's largest chains jumped nearly 5 percent in January compared with a year ago, according to the International Council of Shopping Centers, a trade group. The increase defied widespread concern that wintry weather would keep consumers inside. The ICSC had cut its sales forecast mid-month after reports of weak traffic at the malls. But the final tally was higher than even its earlier expectations.
"Retailers weathered the storms in January, both literally and figuratively," said Michael P. Niemira, ICSC senior economist.
The sales were recorded at stores open at least a year - a key measure of a retailer's health known as same-store sales. The strong showing was particularly notable because it stretched across every retail sector. Economists are carefully watching how much consumers spend - and where those dollars go - as an indicator of the strength of the nation's recovery.
Clothing stores were the star performers in January, with sales up 7.3 percent compared with last year. That was primarily driven by blockbuster performance at Limited Brands, which owns Victoria's Secret and Bath & Body Works. Sales at the company shot up 24 percent - the most of any chain - thanks to pent-up demand after a slower pace of discounting, executives said. As a result, the company raised its forecast for fourth-quarter earnings Thursday to $1.23 to $1.25 per share, from $1.02 to $1.17.
Luxury stores continued their ascent in January, with Neiman Marcus reporting sales nearly 10 percent higher from a year ago. Nordstrom posted a 4.8 percent increase, and Saks rose 4.4 percent.
High-end retailers rebounded quickly after the recession, but discount and mass market stores have struggled as their customers remained under strain. Last month, however, several discounters also got a boost, albeit a smaller one than their fancy counterparts.
Kohl's sales rose 1.4 percent in January, with the company citing a 6o percent increase in online sales. TJX, which owns value chains T.J. Maxx and Marshalls, reported a 2 percent increase, better than it had expected. Both chains increased their earnings forecast as a result.
"Shoppers are slowly becoming less cautious about their spending," said Frank Badillo, senior economist for consulting firm Kantar Retail.
Still, Mother Nature got in a few blows. Target's sales failed to meet executive's expectations, posting an increase of 1.7 percent. The company said the South and the Northeast - both of which suffered significant snowfall last month - were among the most depressed regions. American Eagle's sales dropped 6 percent, as foot traffic and the number of transactions declined in January.
Even retailers that performed well did not escape the fury of the flurries.
TJX and Aeropostale both cited the effects of bad weather on sales despite their stores' good performance, said Amy Noblin, an analyst with Weeden & Co.
"While most companies beat [expectations] this morning," Noblin said, "many still called out the impact of weather on the month."