Retailers expecting rising sales
NEW YORK — Retailers elated by stronger-than-expected holiday sales are expected to report today that they saw an unintended consequence in January: sales up only 1 percent from last year by one measure.
Stores ordered so conservatively for the holidays that they ended December with relatively little excess inventory — and less than usual to mark down in January.
As a result, some stores pushed up deliveries of spring items from jumpsuits to sandals. But bargains were all that most consumers wanted.
“During the Christmas season, they rewarded themselves,” said Stifel Nicolaus & Co. analyst Richard Jaffe. By last month, Jaffe says, shoppers were “hunkering down” again and didn’t buy much of that regular-price spring stock.
Michael Niemira, chief economist at The International Council of Shopping Centers, predicts retail chains reporting Thursday on their sales at stores open more than a year will show a 1 percent rise in January.
The figure — which Niemira estimates rose 3.6 percent for December, compared with December 2008 — is considered a key indicator of retailers’ health. His calculation excludes Wal-Mart Stores Inc., the world’s largest retailer, however, because Wal-Mart no longer reports its monthly sales.
The figure fell 4.8 percent last January from January 2008, and the month is generally considered retailers’ least important. So many merchants are more worried about the next few months than January’s modest showing.
For January, luxury chains are expected to offer a bright spot, as affluent shoppers — seeing their worth beginning to rebound — kept spending.
Analysts surveyed by Thomson Reuters expect Nordstrom Inc. to post a 5.5 percent gain at stores open more than a year, for example. They see Saks Inc. reporting a 2.8 percent increase.
Bolstering those forecasts, cosmetics company Estee Lauder Cos. reported last week that even some of its most expensive offerings fared well in its fiscal second quarter, including an anti-aging treatment that costs $47.50 per ounce. Estee Lauder’s profit rose 62 percent for the period.
Lower-price retailers like Costco Wholesale Corp. and Target Corp. also should show healthy gains as shoppers refocused on essentials like food after the holidays. But stores that offer middle-income shoppers nonessentials, including many department stores and mall-based clothing chains, could show sales fell or increased only slightly.
Until the job market improves, many shoppers are likely to remain frugal. Economists surveyed by Thomson Reuters estimate that employers added 5,000 jobs in January, following a loss of 85,000 in December. But government figures coming Friday are expected to show the unemployment rate ticked back up to 10.1 percent in January from December’s 10 percent.
Some forecasters expect the retail industry to post a 31 percent increase in fourth-quarter profit compared with a year earlier, but they say the current quarter will be more challenging.
Economic recovery in the U.S. rides large in part on consumer spending, including major expenses like health care and housing, because it accounts for 70 percent of economic activity, according to the federal government.
Manufacturing grew last quarter as businesses moved to replenish their inventories, but they will cut back again unless consumers spend more, economists say.
To sign up for Mississippi Business Daily Updates, click here.
FOLLOW THE MBJ ON TWITTERMy Tweets
Top Posts & Pages
- Alcorn president launches new customer service task force
- NEW IN MADISON COUNTY — Mississippi Bio-Medical Business Collaboratory to be introduced Friday
- David Duval, former British Open winner, joins Sanderson Farms field
- Court rules against Greenwood councilwoman; must give up office
- GreenTech holds grand opening of neighborhood electric vehicle plant
- Turner Grain’s bankruptcy will help consolidate lawsuits alleging breach of contract
- Cochran continues to reach out to African American voters
- Peoples Bank reports quarterly loss due to bad loans
- Senators write letter over Waters of the United States proposal