Friday, February 4, 2005

Matthew Staver / Bloomberg News Rhoda Colman shops in the shoe section inside the Nordstrom store in Park Meadows shopping center in Littleton, Colo. Nordstrom Inc. said December sales rose more than it forecast. Luxury and specialty stores' sales led the way.

Upscale retailers lead sales gains for January

Luxury and specialty stores draw crowds; clearances, spring items help.

By Rachel Katz / Bloomberg News

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Sales at U.S. retailers rose 3.6 percent in January, beating analysts' estimates and led by luxury retailers including Nordstrom Inc. and specialty stores such as American Eagle Outfitters Inc.

The gain at stores open at least a year was the highest in three months, the International Council of Shopping Centers said Thursday. The New York-based trade group had forecast a 3 percent increase from a year earlier. Wal-Mart Stores Inc., the world's largest retailer, said sales rose 2.5 percent but were hurt by storms in the Midwest and East.

Upscale retailers such as Nordstrom and apparel chains that draw fashion-conscious women and teenagers had some of the biggest gains. Clearance sales and more spring items helped sales as shoppers returned after Christmas with gift cards.

"This is still the high-end story," said Lynn Mander, who helps manage almost $2 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pa., including Target Corp. shares. "The consumer that has more discretionary income is spending in those stores."

Sales at Nordstrom climbed 8.8 percent and American Eagle, which caters to teens, gained 22 percent. Target said sales surged 9.4 percent, boosted by purchases of shoes and jewelry. Retailers' sales slowed for a third consecutive month from a year earlier, according to ICSC, which tracks results from about 72 chains.

Sales will rise about 3 percent in February, ICSC said. Monthly gains last year averaged 4 percent.

Sales at Wal-Mart rose at the low end of its forecast for a gain of 2 percent to 4 percent. The discounter forecast the same range of gains this month. Sales of food were stronger than general merchandise at Wal-Mart, which closed 42 stores after storms dumped more than a foot of snow from Wisconsin to Massachusetts beginning Jan. 21.

Department store results were hurt by the blizzard, which forced some malls to close, UBS analyst Linda Kristiansen wrote in a report. Sales at May Department Stores Inc. fell 7.2 percent, more than the 2.8 percent average estimate of analysts polled by Thomson Financial. Saks Inc. sales rose 0.8 percent, less than forecast, as a 3 percent increase at the Saks Fifth Avenue unit outweighed a decline at its lower-priced department stores.

Four out of five gift cards purchased during the holiday season may have been redeemed by the end of January, Smith Barney analyst Deborah Weinswig wrote. Retailers who were able to clear out winter goods and move in spring fashions benefited by selling more merchandise at full price, she wrote.

Target's sales beat estimates after the company introduced a "Global Bazaar" section featuring bamboo plant stands from Japan and carved elephant bookends from Africa. Sales at J.C. Penney, the second-largest U.S. department store chain, increased 3.3 percent; analysts had expected a decline.

"Target has been doing a great job with merchandise," said Mike Koskuba, who helps manage about $1.2 billion at Victory Newbridge in New York, including 1.2 million Kohl's Corp. shares. "Higher energy costs is still an issue but becoming less of an issue."

Kohl's sales dropped 1.6 percent.

Many retailers faced difficult comparisons with a year ago, when sales rose 6 percent, according to ICSC.