Retail sales fall; Wal-Mart scraps monthly view

ATLANTA Thu Feb 5, 2009 5:12pm EST

1 of 2. Shoppers walk with a loaded cart inside the Wal Mart store at Fair Lakes, Virginia on Black Friday November 28, 2008.

Credit: Reuters/Larry Downing

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ATLANTA (Reuters) - Most U.S. retailers reported lower monthly sales for January, although discounter Wal-Mart Stores bucked the trend with a stronger-than-expected increase as shoppers stocked up on necessities such as food.

Retailers as a whole delivered a 1.8 percent same-store sales decline in January. That's the second-weakest monthly drop since Thomson Reuters began tracking the data in 2000, behind a 2.1 percent fall in November 2008.

Apparel stocks posted some of the biggest share price gains, and Christine Chen, an analyst with Needham & Co, said the sector could be approaching a bottom.

Most retailers maintained or slightly raised their guidance, Chen noted, adding, "That sends a message to investors that maybe numbers are finally low enough and expectations are finally low enough."

Wal-Mart's U.S. sales at stores open at least a year rose 2.1 percent, excluding gasoline, better than Wall Street estimates of a 1.1 percent rise.

Excluding Wal-Mart, the decline was 5.7 percent, with apparel chains like Gap and department store operators like Saks Inc posting the sharpest drops.

Wal-Mart shares rose 4.3 percent, while the Standard & Poor's Retail Index advanced 2.8 percent.

The International Council of Shopping Centers forecast that U.S. same-store sales will drop 1 to 2 percent in February. The group said it expects sales to stay "sluggish" for six months, but sees the rate of decline moderating later this year.

WAL-MART SCRAPS MONTHLY FORECASTS

Wal-Mart also said it would no longer issue monthly sales forecasts because of volatile consumer habits, in a further sign of concern over the economy. Instead, the world's largest retailer will give forecasts on a 13-week basis, four times a year.

Two other chains, Pacific Sunwear of California and Chico's FAS, also said they would stop reporting monthly same-store sales.

"Wal-Mart follows a long line of companies deciding not to provide guidance," said retail analyst Todd Slater of Lazard Capital Markets. "It suggests a significant lack of visibility."

Wall Street estimates for January were already depressed following December sales that reflected the weakest holiday shopping season in nearly 40 years.

While deep discounting attracted some shoppers, cooler temperatures slowed traffic in parts of the United States. A drop in gift-card use during January, typically a month driven by clearance sales, also contributed to the weakness.

Industry leaders are braced for more pain as jobless numbers continue to rise and access to credit remains tight.

"We don't expect nor do we plan for improvement in customer traffic in 2009," J.C. Penney Chief Executive Myron Ullman told analysts. "We believe that the current environment is not of short duration."

On Thursday, the National Retail Federation trade group repeated its call for a series of temporary sales-tax holidays, saying the current U.S. economic stimulus legislation might not do enough to spur consumer spending and economic growth.

CLOTHING CHAINS STAND OUT

Still, quite a few retailers such as Gap Inc, Macy's, Aeropostale, Ross Stores and TJX Cos raised their profit forecasts.

Among clothing chains, standouts included Aeropostale's 11 percent, same-store sales rise and American Apparel, which managed a 2 percent sales gain for January on top of a year-earlier 40 percent rise.

Aeropostale shares were up 7.7 percent, Gap gained 6 percent and TJX advanced 10.7 percent. Macy's rose 5.4 percent.

The worst performers included Children's Place, with same-store sales down 11 percent, and American Eagle Outfitters, which posted a 22 percent drop. Department stores continued to ring up declines as mall traffic and demand for luxury goods suffered.

Talbots, which has struggled with declining sales as women over 35 pull back on purchases, announced that it will close stores and cut corporate jobs. The retailer also said it got a $200 million loan from a majority shareholder that it will use to pay off debt.

(Additional reporting by Nicole Maestri, Aarthi Sivaraman, Caroline Humer and Martinne Geller in New York, Ben Klayman and Jessica Wohl in Chicago and Alexandria Sage in San Francisco; Editing by Lisa Von Ahn, Matthew Lewis, Leslie Gevirtz)

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