Friday, February 6, 2004

January sales, cold keep retailers hot

By Anne D'Innocenzio
The Associated Press

NEW YORK - Consumers lured by record-breaking cold temperatures and clearance sales continued their spending spree in January, lifting sales well above expectations for many of the nation's retailers. Even those merchants who lagged the competition in recent months did well.

Some of the big surprises came from May Department Stores Inc.; Sears, Roebuck and Co.; and teen retailer Abercrombie & Fitch, all of which reported results that soared past Wall Street estimates. There were a few disappointments, including Talbots Inc., which blamed sharper-than-expected sales declines on its lack of winter inventory.

The robust January performance followed what was a respectable holiday season for many stores and signaled to some analysts that a consumer spending recovery, uneven in the past, seems to be gaining more traction.

"This is definitely a lot stronger than expected," said Michael P. Niemira, chief economist at the International Council of Shopping Centers. "And it is across the board. This is a taste of the kind of performance we're likely to see in 2004."

He added that the frigid weather was a big positive, helping to boost sales of winter apparel and other cold-weather items.

Already, Cincinnati-based Federated Department Stores Inc. Tuesday raised its fourth-quarter earnings outlook and announced a larger-than expected 5.5 percent same-store sales gain. Analysts expected 0.3 percent.

Taken by surprise

January - the final and least important month in the retail sales calendar - was not expected to be strong, given that stores had little inventory to clear.

But some retailers, including Gap Inc. and JC Penney Co. Inc., reported that they did well with regular-priced merchandise, including spring apparel.

Redemption of holiday gift cards also helped sales.

Niemira said the International Council of Shopping Centers-UBS sales tally of about 72 retailers was up 5.8 percent for the month, much better than the 4 percent to 4.5 percent gain previously expected. The tally is based on same-store sales, those from stores open at least a year. They are considered the best measure of a retailer's health.

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