How Are Retailers Faring This Winter?

Though the results are modestly mixed, a modest share of U.S. retailers have seen monthly sales improve in January. The reasoning suggested for the improvements is varied, and in one case is also the reason some sales may have declined.

Costco Wholesale Corp (NASDAQ:COST), Limited Brands Inc (NYSE:LTD), Zumiez Inc (NASDAQ:ZUMZ), and Stage Stores Inc. (NYSE:SSI) also managed to pull in stronger sales than they were predicted to get. Costco saw same-store sales and sales at stores open more than a year rise 4 percent, beating the 3.9 prediction of Wall Street. Limited brands was aided by its Victoria’s Secret stores.

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Analysts’ expectation for January were for a 3.5 percent increase in same-store sales across a selection of 18 different retailers — this compares to 4.4 percent growth the same time last year. Two large drugstore chains, Walgreen Co. (NYSE:WAG) and Rite-Aid Corp. (NYSE:RAD), were not included in the sales growth forecast.

Not all retail chains have fared well. Cato Corp. (NYSE:CATO), Bon-Ton Stores Inc. (NASDAQ:BONT), Buckle Inc. (NYSE:BKE), and Wet Seal INC (NASDAQ:WTSLA) all reported less enthusiastic sales, with Cato Corp. reporting a drop in same-store sales of 12 percent for the month…

There was mixed reasoning behind the growth and decline of sales. Clothing retailers are thought to have received a bump from cold weather that helped clear the shelves of winter apparel. But, not all states are so cold in winter, so a more significant reason might be the avoided fiscal cliff, as consumer sentiment improved when the issue was avoided.

While avoiding the fiscal cliff may have cheered up some consumers and inspired increased retail shopping from them, the new year also came with a 2 percent increase in the payroll tax, which may have been a reason for declining sales at some retailers, particularly those that cater to lower-income shoppers. Cato Corp. partly blamed this tax increase for its sales drop.

Several other retailers are expected to post monthly results later in the day Thursday that will give more insight into the current retail climate.

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