honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Friday, February 9, 2007

Retailers enjoy January rebound

By Christine Dugas
USA Today

Many stores, like this Border's shop in Bethel Park, Pa., pushed gift cards during the holidays. Those promotions paid off in January for many retailers.

GENE J. PUSKAR | Associated Press

spacer spacer

Retailers — after posting weak sales in December — got a huge boost in January as shoppers armed with gift cards treated themselves.

Department stores benefited more than specialty stores. Consumers spent $27.8 billion on gift cards during the critical holiday season, and department store cards were the most popular, the National Retail Federation says.

Among the retailers reporting better-than-expected January same-store sales yesterday were Nordstrom, up 11.1 percent over a year ago; Saks, up 11.4 percent; and Federated, up 8.6 percent. Federated, which owns Macy's and Bloomingdale's, yesterday raised its earnings outlook for the fourth quarter, which ended in January, to $1.55 to $1.60 a share, up from an earlier forecast of $1.40 to $1.50 a share.

COLD EQUALS SALES

Stores in some regions of the country were helped by the return of colder temperatures, which spurred sales of coats and other cold-weather gear. "But what they did sell was at extremely discounted prices," says Jennifer Black, a retail analyst and president of Jennifer Black & Associates.

Several other factors stimulated sales. Carl Steidtmann, chief economist for Deloitte Research, noted that employment and wage growth have been strong. In the year ended in January, 2.1 million jobs were created. And disposable income, after taxes and adjusted for inflation, rose 3.1 percent in the fourth quarter of 2006. He also pointed to the drop in the price of gasoline, which fell to an average $2.11 a gallon for regular in January from $2.30 at the end of December, according to the Energy Department.

Other retail winners include Wal-Mart Stores, where same-store sales rose 2.2 percent, and J.C. Penney, up 3.6 percent.

GAP GETS BETTER

Gap's flat sales, driven by markdowns on clothing, beat expectations for the first time in a long time, says Dana Telsey, a research analyst and chief research officer of Telsey Advisory Group. "Our strategies to clear through holiday product in January were largely effective," said Sabrina Simmons, senior vice president of corporate finance at Gap.

It wasn't a stellar month for all retailers. "It's still a fairly difficult retail environment, and there certainly is a reward for retailers" who have the right mix of merchandise and provide "a higher level of customer service," Steidtmann says.

Among the poor performers: Ann Taylor Stores saw a 10.2 percent decline in same-store sales; Abercrombie & Fitch, down 6 percent; and Chico's, down 3.5 percent.

Heading into spring, the retailers that will do well are those that have fresh and compelling new products, Black says. "That's what it's always about."