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Shoppers buy into the New Year
Heavy discounts and gift card redemptions spur apparel sales in January. Luxury spending still hot.
February 4, 2005: 11:56 AM EST
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Deep discounts and gift card redemptions helped to warm up retail sales in January despite the formidable presence of Old Man Winter last month.

"January is turning out to be a real surprise to the positive," said Ken Perkins, retail analyst with RetailMetrics. "So far the same-store numbers that we're getting aren't bad at all."

January is typically the quietest month of the fourth-quarter for retailers, accounting for about 20 to 25 percent of total sales for the period.

Perkins said he had anticipated a much gloomier picture last month. "Retailers last month were up against some stiff comparisons from a year ago. But it looks like consumers continued to take advantage of post-holiday bargains as well as redeem the gift cards received during the holidays."

Apparel and luxury again were among the standout groups posting strong results. Same-store sales at teen apparel chain American Eagle Outfitters (Research) jumped 22 percent; Abercrombie & Fitch (Research) posted a 17 percent rise in its sales last month, while sales at bebe stores (Research) soared 29.3 percent.

Limited Stores (Research), owner of Victoria's Secret, Bath & Body Works and Express chains posted sales up 9 percent, led by a 12 percent gain at the boudoir behemoth Victoria's Secret. But the company's clothing chains saw steep sales declines, down 8 percent at Express and down 16 percent at the Limited Stores division.

There's been some recent speculation among industry analysts that Limited could be better off shedding its struggling clothing units, which together represent just a small fraction of the company's total annual profit.

Consumers' love affair with luxury is still going strong. High-end retailer Nordstrom (Research) posted an 8.8 percent gain in comparable sales last month. Sales at Neiman Marcus (Research) rose 12.2 percent.

It was more of a struggle, however, for No. 1 retailer Wal-Mart Stores (Research). The discount powerhouse posted January sales at its stores open at least a year that were at the low end of its forecast for the month, hurt by a disappointing performance at its Sam's Club division.

Bentonville, Ark.-based Wal-Mart said same-store sales last month grew 2.5 percent. The retailer had expected sales to grow between 2 to 4 percent in January.

Comparable sales at Wal-Mart (Research) discount stores grew 3.2 percent, while sales fell 0.8 percent at the company's Sam's Club wholesale club stores.

In a pre-recorded sales call Thursday, Wal-Mart blamed a calendar shift for the weak sales trends."This year the Super Bowl weekend is one week late. Therefore, pre-Super Bowl sales fell one week later versus last year," the retailer said.

Wal-Mart also said "traffic trends were negatively impacted by unseasonable weather in the Northeast and the Midwest." For February, Wal-Mart said it expects same-store sales up between 2 to 4 percent.

Said Perkins, "Given that Super Bowl is scheduled one week later this year, discounters that have significant food and beverage sales may see some sales transferred out of January into February."

The biggest drag on January results came from department stores. Kohl's (Research) sales slipped 1.6 percent. May Department Stores (Research), which operates Lord & Taylor, Filene's and Hecht's, posted a 7.2 percent drop in January comparable sales, while Sears (Research)' sales rose an anemic 0.8 percent.

J.C. Penney (Research) managed to successfully weather the sector downdraft, pulling out a 3.3 percent gain for the period.  Top of page

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