Just thought it was interesting, appears January was a pretty decent month for offline retailers, anyone notice similar trending online?

Balmy Weather, Gift Cards
Helped Warm Retail Sales

February 2, 2006 3:55 p.m.

U.S. retailers, buoyed by gift-card redemptions and unusually warm weather, posted stronger-than-expected sales gains in January but warned that sales could slow in the coming months.

An index of 60 retailers tracked by Retail Metrics LLC, a market research firm in Swampscott, Mass., showed an average gain in same-store sales in January of 4.8%, beating the consensus forecast of Wall Street analysts, which predicted a 4.1% gain. The monthly gain was the largest for the index since June. All told, three-quarters of the retailers beat Wall Street expectations for the month. Same-store sales are a measure of sales increases at stores open for at least a year.

Yet the January gain says more about holiday-season spending shifting into January than it does about the potential for sales gains in February and March, Retail Metrics President Ken Perkins said. Retailers that heavily promoted gift cards reaped sales from redemptions of those cards in January, though few, if any, quantified the gain. And warm weather last month -- the warmest for January in decades, according to weather-analysis firm Planalytics Inc. -- spurred strong sales of new spring merchandise for several retailers.

The weather is expected to turn cooler this month, and residual holiday spending likely ran its course in January. To wit, Wal-Mart Stores Inc., which hit the high end of its projected range for January sales with a 4.7% increase, set a tepid forecast for February sales of 2% to 4%. "I think they have some tough sledding ahead," Mr. Perkins said of U.S. retailers.

The January numbers might bode well for the overall economy, though. "It certainly doesn't tell us what the economy is going to be doing for the next nine or 15 months, but for the next couple of months it's certainly a positive sign," said Jan Hatzius, chief U.S. economist for Goldman Sachs Group Inc.

The January gains spurred several retailers to raise their earnings forecasts for the quarter or the year. Among them was Federated Department Stores Inc., which hiked its prediction to $2.60 to $2.65 in fourth-quarter earnings per share, excluding merger-integration costs, from the earlier range of $2.25 to $2.35. Also boosting their guidance were TJX Cos. Inc., which announced it will exceed its previous estimate of fourth-quarter earnings per share of 41 cents to 43 cents; and Gap Inc., which increased its forecast for fiscal 2005 earnings per share to $1.22 to $1.25 from the previous prediction of $1.12 to $1.17.

Indeed, few major retailers posted declines in same-store sales for January. Even the laggards that consistently posted losses in 2005 -- retailers such as Gap and Pier 1 Imports Inc. -- notched gains in January. Gap posted a 1% increase in sales last month; Pier 1, 8.2%. However, Pier 1 acknowledged that much of its gains came from sales of discounted merchandise that will cut into its fourth-quarter margins. The Fort Worth, Texas-based retailer of imported furniture and accessories predicted its same-store sales for February will show a loss in the single-digit percentages.

One major retailer, womenswear seller Limited Brands, posted flat same-store sales for the month. Those that logged strong gains included discounter Target Corp., which beat rival Wal-Mart's gain with a 5.2% increase in same-store sales; and warehouse-club operator Costco Wholesale Corp., which posted an 8% gain in sales at its U.S. clubs. Wal-Mart noted that it opened 69 stores in January, a record for the retailer.

Same-store sales are a key indicator of a retailer's growth. Economists watch retailers' monthly sales as one indicator of U.S. consumer-spending trends. But the figures reflect only part of total consumer spending, as they don't include all chains. And some of the largest retailers, including Home Depot Inc. and Best Buy Co., don't report sales on a monthly basis. The monthly reports also miss other kinds of spending, such as many online purchases. As well, some chains that usually report monthly results, such as dollar-store chain Dollar General Corp., abstained to report their January results along with their annual results later this month.