Good News For Retail
Wonderful news for retail! January sales at top U.S. retail chains shifted gears and took a positive turn from last year’s decline, possibly because many avoided drastic clearance sales, and shoppers cashed in on the holiday gift cards.
Costco Wholesale Corp, and Limited Brands were among the numbers that came in ahead of Wall Street Expectations. Apparel retailers Hot Topic and Wet Seal reported declines that were even horrible than were forecast.Twelve retailers were tracked by Thomson Reuters, and five of them beat estimates, while six came in below forecast. Eighteen other store chains were due to report also.
Analysts look upon January as the least important month of the holiday fourth quarter because it yields the smallest portion of its sales. But the fact that retailers avoided the extensive clearance sales that damage January sales last year, and with customers cashing in on gift cards received in December lends to the idea that some of these companies could raise their earnings forecasts.
Costco reported that same store sales rose by eight percent in January which is better than the 7.8 percent increase that was expected. In addition the wholesale club jumped up by 25 percent at its international divisions. Sales at Limited Brands increased 6 percent, topping the Wall Street predictions for a half of a percent increase. Retailers’ observations about sales trends — especially whether traffic weakened considerably at the end of January — may be a signal to how consumers will spend this quarter.
Some researchers are concerned, holding the belief that the successful yet unexpected holiday sales pulled spending forward. That means that retailers could have a hard time recruiting shoppers in the first quarter, especially if cold weather trumps demand for spring merchandise.
But all in all, great news.
Mallory McGuinness works for a debt collection company. She also writes pieces on business and finance, consumer spending and debt collection.
