Retailers delivered strong January sales that sailed past
views Thursday as consumers stepped up the pace post-holiday and
snapped up winter clearance bargains.
Sales at stores open at least a year rose 4.5% vs. a year ago,
says Ken Perkins, president of Retail Metrics. Analysts forecast
a 2.8% rise. Fifty-five percent beat views, in line with the
long-term average. It was the best monthly showing since
September 2011 when retailers posted a 5.8% increase in
"It was an excellent start to the calendar year," said
Perkins. "It suggests the consumer is feeling OK and probably got
a psychological boost from the temporary resolution to the fiscal
cliff at the beginning of the month."
The continued improvement in the consumer's net worth amid a
rising stock market and gains in homes values made consumers feel
better about their broader net worth, Perkins adds, and helped to
temporarily offset the impact of rising gas prices and the
payroll tax increase that took effect at the start of the
Payroll Tax Hike
"The worry going into the month was the payroll tax hike,"
adds Michael Niemira, chief economist at the International
Council of Shopping Centers. "But as the dust settled, it was
less of a factor and the bargains from the clearance of
merchandise was more of a driver of sales."
A good majority of retailers beat views by a wide
) andLimited Brands (
Department stores were the big winners as they lured shoppers
with good deals on clearance goods and attractive new
merchandise. The segment saw a robust 8.1% rise in same-store
sales, the largest gain for the group since November 2007.
Giant department store operator Macy's saw an 11.7% pop in
comps vs. a year earlier, more than double forecasts for a 5%
"Our sales were driven by our strategy to flow-in more fresh
fashion goods in December to better serve post-holiday shoppers
seeking new and interesting merchandise," said Chief Executive
Terry Lundgren in a press release reporting results.
High-end peer Nordstrom posted a 11.4% rise in comps vs. a
year ago, also more than double views for a 5.6% gain in
The specialty apparel group delivered a 5.4% rise in
same-store sales from a year earlier. Same-store sales at
Victoria's Secret parentLimited Brands (
) were up 9% from a year earlier, well ahead of forecasts for a
3.4% rise. Gap saw comps rise 8% vs. a year earlier, double the
forecast for a 4% increase.
Off-price retail operators saw solid gains.Ross Stores (
)saw a 4% increase in comps vs. a year earlier, ahead of views
for a 3.1% rise. It also raised 2012 fourth-quarter guidance.TJX
(TJX) saw a 3% gain, in line with views. It also raised its
earnings outlook for the fourth quarter and the year.
Costco Wholesale (COST) saw a 4% rise in same-store sales,
slightly below views for a 4.1% gain.
Ross and TJX were among the five retailers that raised
fourth-quarter guidance when they reported January comps, says
Perkins. Analysts see a 9.4% rise in fourth-quarter profits for
the industry overall, he adds.
Perkins says January sales got off to a strong start over the
New Year's holiday weekend with retailers benefiting from two
extra selling says vs. last year. Solid sales and traffic held up
through the Martin Luther King holiday weekend. Cold weather
towards the end of the month served as a catalyst for shoppers to
scour the clearance racks for bargains on sweaters, coats and
other winter apparel.
Niemira also calculates a 4.5% rise in January same-store
sales vs. a year ago.
Extrapolating Too Much
But the month's showing was an "anomaly," with a number of
one-time factors boosting the numbers.
"I wouldn't extrapolate too much from January," said Niemira.
"It's the lowest volume month of the year. And it can be affected
by weather and lots of special factors that get accentuated cause
of the low volume."
Niemira expects the pace of same-store sales growth to slow to
2.75% to 3% in February.
Perkins says February will be a tough month as retailers face
difficult comparisons vs. last year and go up against some severe
But he expects retailers to see a "decent spring," in March
and April as the weather improves and we see continued
improvement in employment and in the housing market. Still, adds
Niemira, as the year progresses we will continue to see the
fiscal drag from the payroll tax increase. And higher food prices
is another head wind that could cut into consumer spending.