January Retail Sales Up
By ANNE D'INNOCENZIO
AP Business Writer
NEW YORK (AP) -- A handful of retailers began reporting January results Thursday showing a surge in sales, largely driven by bargains as merchants aimed to clear out excess inventory after a dismal holiday season.
The sales figures from retailers including Neiman Marcus, The TJX Cos., and The May Department Stores, Co. were in line or beat Wall Street expectations. However, analysts don't see the preliminary retail results --the bulk of which will be released next Thursday -- as a reassuring sign of an uptick in consumer spending.
``Don't be fooled by what appears to be a relative strength in the retail sector. The worst may be yet to come,'' said John Pitt, an analyst at Redbook Services, noting he will get a better sense of the retailing climate with February sales results. January is the least important for retailers.
The economic picture is looking far from rosy, given the mounting piles of missed earnings forecasts, layoffs from a wide range of companies from Xerox Corp. (NYSE:XRX - news) to Amazon.com (NasdaqNM:AMZN - news), and government and industry group reports indicating a rapid slowdown in the U.S. economy and consumer spending.
On Thursday from the National Association of Purchasing Management, a key industry group, reported that manufacturing activity in January slumped to its lowest level in nearly a decade. A day earlier, the Commerce Department reported that economic growth in the fourth quarter was at its weakest level in five years.
Meanwhile, growing fears of a recession sent consumer confidence in January plunging to its lowest level in four years, the Conference Board said Tuesday.
The Federal Reserve's Wednesday move to cut interest rates by a hefty half-point --the second such cut in a month -- and the potential for a tax cut may help consumers' willingness to spend.
But Michael P. Niemera, vice president at Bank of Tokyo-Mitsubishi Ltd., believes ``the real crimp has been consumers' ability to buy.''
Higher oil prices, stagnant growth in personal income and mounting consumer debt are still looming factors, he and other analysts noted. Personal credit card debt now totals $655 billion, an 11 percent increase from a year ago, according to the Federal Reserve.
``Consumers are still spending because they have jobs but they are buying more cautiously,'' Kurt Barnard, president of the Barnard Retail Trend Report, based in Upper Montclair, N.J. He said he will be carefully watching unemployment, which have been hovering at 30-year lows.
As for January sales, many retailers, including Dillard Department Stores, Federated Department Stores and Saks Inc. (NYSE:SKS - news), are on track to meet or beat Wall Street estimates. But much of the strength came in the first two weeks, analysts said. They also believe that the heavy promotions needed to get rid of mounds of inventory will hurt merchants' profits for the fourth quarter.
The St. Louis, Mo.-based May Department Stores saw sales at stores open at least a year, known as same-store sales, increase 3.4 percent in January, coming in a bit above the 3 percent gain analysts expected. Same-store sales are seen as the best indicator of a retailer's strength.
The department store reported overall sales rise 10 percent to $746.6 million for the four weeks ended Jan. 27.
TJX Cos., based in Framingham, Mass., said same-store sales rose 4 percent for the period. Total sales registered a 12 percent increase to reach $472 million.
The Chestnut Hill, Mass.-based Neiman Marcus Group, which operates Neiman Marcus stores and Bergdorf Goodman, saw same-store sales rise 5.5 percent. That was a bit above the 3 to 5 percent revenue range that analysts expected. Total revenues for the four weeks ended Jan. 27 were $177.5 million, a 7 percent increase from the year-ago period. |
