WRAPUP 3-U.S. retailers struggle through dismal January
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NEW YORK, Feb 7 (Reuters) - U.S. consumers held onto their cash and gift cards longer than usual and ignored widespread discounting in January, resulting in disappointing sales at many retailers, most notably industry leader Wal-Mart Stores Inc (WMT.N).
But investors took heart in some modestly sunny spots in the sector. Warehouse club operators like BJ's Wholesale Club (BJ.N) and Costco Wholesale Corp (COST.O) and clothing chains like Gap Inc (GPS.N) and AnnTaylor Stores Corp (ANN.N) reported sales on Thursday that beat conservative Wall Street estimates.
While overall January sales data were "clearly disappointing," they were also not as bad as many had feared, said Ken Perkins, president of research firm Retail Metrics.
"Believe it or not, a majority of retailers, 57 percent, beat very low expectations," Perkins wrote in a note.
Still, the world's largest retailer, Wal-Mart, led the pack of companies whose sales fell short of expectations. Its same-store sales rise of 0.5 percent in January was well below the 2 percent increase analysts had forecast.
Wal-Mart said gift-card redemptions were not as brisk as expected, as shoppers kept their gift cards longer than they usually do. Those who redeemed the cards often used them for necessities like food and other consumables, instead of higher-margin discretionary items, it said.
The retailer also blamed unpleasant weather, especially in the Midwest, for its shortfall.
The gift card sales news is a let-down for retailers who record revenue after the cards are used, not when they are sold, and bet on shoppers spending more than the cards' worth once they get into the stores.
No. 2 U.S. discount retailer Target Corp's (TGT.N) posted a same-store sales drop deeper than its own forecast and that of Wall Street.
Weak January sales also plagued Macy's Inc (M.N) and Kohl's Corp <KSS.N, as the department store chains posted declines of 7.1 percent and 8.3 percent respectively, both missing analysts' expectations for a smaller drop.
January's sales data follow a dismal holiday season for retailers amid mounting fears that the U.S. economy could be tipping into recession, as consumers juggling higher fuel and food costs and a slow housing market cut back on spending.
In periods of economic uncertainty, investors and analysts pore over same-store sales data more than usual to assess the health of U.S. consumer spending, which makes up about two-thirds of the economy.
Cutbacks were widespread in January, hitting even higher-end retailers like Nordstrom Inc (JWN.N), whose same-store sales fell a worse-than-expected 6.6 percent. Rival Neiman Marcus Inc, which operates Bergdorf Goodman as well as its namesake stores, said same-store sales rose 3.3 percent, but noted that the increase was helped by an end-of-season sale.
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