Retail sales warmed up in January
Major stores generally beat forecasts in the year's first month; slower February expected.
By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) - Major retailers posted stronger sales gains in January than they did in December, although several warned of more modest results in the current month.

Major retail chains reported a 4.9 percent rise in stores open at least a year, a closely watched retail measure known as same-store sales, according to Thomson Financial.

That's better than the 4.1 percent gain forecast for the month by analysts surveyed by Thomson, as well as an improvement from the 3.3 percent rise in the all-important December sales period. It also was better than the solid 3.5 same store sales gain seen in January 2005.

Purchases made in January using gift cards bought before the new year are counted as January sales, so the month -- once known for its "white" sales on linens and clearance sales for unsold Christmas merchandise -- has become an important sales period.

Warmer than normal weather in much of the country may also have helped sales.

Thomson reports that 72 percent of major retailers beat analysts' forecasts and and another 2 percent hit the target. The better-than-expected sales came in virtually every retail sector other than drug stores, which narrowly missed forecasts as a group.

Traditional department stores had the weakest same-store sales gains, up only 2.3 percent as a group, and only slightly ahead of forecasts.

Wal-Mart Stores (Research), the world's largest retailer, posted a same-store sales gain of 4.7 percent, which it had previously disclosed, with a four percent gain at its Wal-Mart unit and an 8.2 percent rise at its Sam's Club wholesale store unit. That was better than the 4.4 percent rise projected ahead of its earlier sales report, and was at the high end of its previously guidance of a three to five percent gain.

But in February, Wal-Mart sees same-store sales being up two to four percent.

Target (Research), the nation's No. 3 general retailer, reported a 5.2 percent gain in same-store sales, which topped the 4.8 percent increase forecast by analysts, and even topped the high estimate of a five percent gain.

Some retailers clearly had relatively bullish sales projections. Wholesale club Costco (Research) reported same-store sales up nine percent. Analysts were forecasting only a 6.9 percent rise. The company said higher gasoline prices in January added 1.1 percentage points to the gain.

Retailers catering to teen shoppers remained white hot, posting a collective 15.6 percent rise in sales.

Abercrombie & Fitch (Research) saw same-store sales soar 33 percent, more than doubling even the aggressive 15.7 percent forecast from analysts. American Eagle Outfitters (Research) posted a gain of 11.3 percent, topping the forecast of a 7.4 percent rise.

Even some retailers that posted relatively modest gains topped forecasts. J.C. Penney (Research) reported a 2.5 percent gain in same-store sales, but that beat the forecast of a two percent rise. Meanwhile, the 1 percent gain at clothing retailer Gap (Research) was far better than the forecast of a 2.8 percent drop in same-store sales in the period.

Penney also joined Wal-Mart in predicting more modest February sales, though, saying that same-store sales would be flat to up slightly. Federated Department Stores (Research), which operates the Macy's and Bloomingdale's chains among others, sees a 0.5 to 1.5 percent decline in same-store sales this month. It also was one of a handful of companies to miss the January sales forecast, posting only a 1 percent rise rather than the 1.2 percent forecasted gain.

Other retailers missing forecasted same-store sales gains include Kohl's (Research), which reported a 2 percent gain rather than the 3.5 percent increase that was predicted. Limited (Research), which operates Victoria's Secret, Bath & Body Works as well as Limited stores, said flat sales fell short of the modest expectation of a 0.1 percent rise.

The sales reports came the same day that a report from the Ernst & Young Consumer Trends Center forecast that full-year retail sales will grow six percent in 2006, down from the 6.7 percent growth seen in 2005.

"We definitely foresee a leveling off in sales growth this year," said a statement from Jay McIntosh, director of consumer products for the accounting firm. "However, there are a number of positive factors--such as improvements in disposable income, increased corporate spending, and relatively low unemployment--that will help to maintain sales."

For more special report on the holiday shopping period, click hereTop of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.