Retailers report strong gains in January
By Lorrie Grant
USA Today
Retailers wrapped up their fiscal year in January with robust gains, signaling that the industry may be headed for a rebound.
Sales at retail chain stores open at least a year in January rallied 5.2 percent, marking the strongest performance for the month in two years and the best of any month since April 2000.
The growth is up from 4.8 percent a year ago and 2.2 percent in December, according to Bank of Tokyo-Mitsubishi's index of 78 companies.
"The magnitude of the gain says we may be at the turning point," says Michael Niemira of the bank's Economic Research Department.
Retailers typically finish the fiscal year in January with firm sales because of sharp markdowns to clear merchandise and make room for spring inventory.
But the rise in January was unexpectedly strong given the sluggish sales throughout the year in the soft economy.
Value shopping drove the growth as consumers continued in January to shift their spending to low-price retailers, such as Wal-Mart, Target and Kohl's, and warehouse clubs such as Costco.
The clubs were the strongest sector for the month, according to Niemira, with sales up 7.7 percent over last year.
Wal-Mart, the world's biggest retailer, drove the discount category with 8.6 percent same-store growth, blowing past expectations of 6 percent and well above 2.4 percent growth a year ago.
"We sense slightly greater optimism at Wal-Mart and Target, which we believe partially reflects the benefit they expect from Kmart's reorganization," says Rick Church, a retail analyst at Salomon Smith Barney.
Troy, Mich.-based Kmart filed for bankruptcy protection from creditors on Jan. 22. It did not report January sales but next month will start filing monthly "operating statements" with the court.
Even the weakest links in the industry, department and specialty apparel stores, had a good month.
For example, the specialty store index was off 2.9 percent, the best reading since April when it nudged up 0.4 percent. AnnTaylor posted a 14.6 percent gain after a string of losses.
