By Phil Wahba
Feb 6 January was a tough end to the most
competitive holiday season for U.S. retailers since the
Retail sales figures reported on Thursday showed shoppers
continue to pinch pennies, seeking out bargains and paying fewer
visits to stores in a month when consumers typically wrap up
their holiday shopping and redeem gift cards.
But economists voiced optimism that American shoppers would
shake off their doldrums later this year, buoyed by stronger job
and economic growth.
The National Retail Federation predicted that sales would
rise 4.1 percent in 2014, outpacing 2013's 3.7 percent growth
"2014 could finally be the year the recovery gets some
traction," said NRF Chief Economist Jack Kleinhenz. Still, he
noted, consumers are "still very careful" in their spending.
The Standard & Poor's Retail Index rose 2.3
percent, beating the S&P 500's 1.2 percent gain.
Last month, Americans were unnerved by slumping stock
markets and impeded from shopping by an unusually cold and snowy
January that, because of high heating bills, could hurt retail
sales into the spring, analysts said.
A group of nine retailers that report comparable monthly
sales posted a 3.6 percent rise for January, below the 4.9
percent pace a year earlier, according to Thomson Reuters.
Some chains managed to register sales gains, but those came
either at the expense of rivals or profit margins.
Costco Wholesale Corp said its same-store sales
rose 5 percent in January, with fresh food a popular item for
its bargain-seeking members. That contrasted with a quarterly
decline at rival Sam's Club, a unit of Wal-Mart Stores Inc
. Costco's shares rose 3.4 percent.
Victoria's Secret parent L Brands Inc posted a much
bigger-than-expected jump of 9 percent in comparable sales,
sending its shares up more than 4 percent.
But L Brands also said its profit margin would be much
lower after it stepped up discounts and extended sales events.
The retailer expects only modest sales gains in February.
Gap Inc reported a better than expected 1 percent
increase, with its low-price Old Navy stores helping it overcome
a 10 percent decline at its Banana Republic chains.
FOUL WEATHER, FOUL MOOD
The consumer mood soured last month. The Thomson
Reuters/University of Michigan's consumer sentiment index
slipped to 81.2 in January from 82.5 in December. Confidence
fell acutely among households with annual incomes below $75,000.
Also, the Dow Jones Industrial Index tumbled 5.3
percent in January, its worst monthly decline since May 2012.
Kohl's Corp, which is not in the Thomson Reuters
tally, said sales in January were "significantly" lower than
expected as shoppers stayed away, and the department store chain
lowered its profit forecast.
It reported a 2 percent decline in quarterly comparable
sales - those online and at stores open at least a year -
despite a good start to the holiday season.
Still, Kohl's shares rose 3.5 percent, in part because the
sales shortfall came from having a low level of clearance
inventory. Stifel Nicolaus analyst Richard Jaffe said in a note
that this would help profit margin.
Other stores have also posted poor reports of late.
Baird analyst Mark Altschwager estimated that comparable
sales at J.C. Penney Co Inc fell 3 percent last month.
And last week, Wal-Mart said its profit for the fourth quarter
ended Jan. 31 would come in at or slightly below its forecast.
Getting shoppers into stores was still a challenge.
Walgreen Co managed to report a jump in comparable
sales, but the drugstore chain's traffic fell 2.2 percent.
The weather was unforgiving, with record cold and heavy snow
last month in the Midwest and Northeast.
Cato Corp, a chain of low-priced clothing stores;
Fred's Inc, which sells general merchandise; and Stein
Mart Inc, an off-price clothing retailer, all blamed
Mother Nature for declines in comparable sales.
Sterne Agee analyst Charles Grom said higher home heating
bills could crimp consumer spending "well into April."