Feb 4, 2010
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January retail sales move into positive territory

Feb 4, 2010

By Michele Gershberg

NEW YORK (Reuters) - January sales at top U.S. retail chains moved into positive territory from last year's decline as many avoided drastic clearance sales and shoppers redeemed holiday gift cards.

Costco Wholesale Corp (COST.O) and Limited Brands (LTD.N), owner of Victoria's Secret, were among the early reports on Thursday 4 February that came in ahead of Wall Street expectations. Apparel retailers Hot Topic (HOTT.O) and Wet Seal (WTSLA.O) posted declines that were even worse than forecast.

According to a preliminary tally of 12 retailers tracked by Thomson Reuters data, five retailers beat estimates, while six came in below forecast. An additional 18 store chains were due to report.

Analysts on average had expected sales at stores open at least one year to rise 2.5 percent for the month, according to Thomson Reuters data, rebounding from a 5.7 percent drop in January 2009.

The figures could mark the fifth consecutive monthly sales increase after a year's worth of declines during the recession, as consumers slowly return to spending and retailers lower prices to match a more circumspect shopper.

December same-store sales rose a stronger-than-expected 2.9 percent, helped by a late holiday shopping surge.

January is seen as the least important month of the holiday fourth quarter, accounting for the smallest portion of its sales. But with retailers avoiding the drastic clearance sales that hurt January sales a year ago and consumers cashing in on gift cards received in December, analysts said some of these companies could raise their earnings forecasts.


Retailers' comments about sales trends -- especially whether traffic weakened significantly at the end of January -- may signal how consumers will spend this quarter.

Some analysts worry that stronger-than-expected holiday sales pulled spending forward so that retailers could have a hard time luring shoppers in the first quarter, especially if cold weather crimps demand for spring merchandise.

Costco said same-store sales rose 8 percent in January, better than the 7.8 percent increase expected by analysts, according to Thomson Reuters data. The wholesale club benefited from a 25 percent jump at its international divisions.

Same-store sales at Limited Brands rose 6 percent, topping a Wall Street view for a 0.5 percent increase.

Late on Wednesday 3 February, skate and snow-boarding inspired retailer Zumiez Inc (ZUMZ.O) posted a surprise 1.8 percent rise in January sales, while analysts forecast a 2.3 percent drop.

At Hot Topic, January same-store sales fell 13.1 percent, missing Wall Street estimates for the third straight month. The teen clothing retailer also said it expected fourth-quarter earnings to be at the low end of its previous outlook of 18 cents to 20 cents a share.

Sales at Hot Topic, which sells rock 'n' roll-inspired clothing as well as music and accessories, have weakened in the absence of new must-have products like its hugely popular "Twilight" merchandise.

By category, analysts expected the worst performance to be from teen and children's apparel retailers, with sales forecast to decline 0.8 percent. The segment is on track to post its 19th consecutive drop in same-store sales, according to Thomson Reuters data.

(Reporting by Nicole Maestri and Michele Gershberg; Editing by Lisa Von Ahn)

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