Image: Abercrombie & Fitch bag
Rick Bowmer  /  AP
Abercrombie & Fitch, which had seen its teen customers defect to less expensive alternatives, saw a surprising sales increase — its first since April 2008.
updated 2/4/2010 11:02:46 AM ET 2010-02-04T16:02:46

Stores received a pleasant surprise in January as shoppers bought a little more clothing at mall stores, delivering solid gains for many retailers and providing more hope that a spending recovery that started late last year is being sustained.

Still, the sales reports, released Thursday, showed two kinds of consumers — ordinary folks who are buying a little more but still focused on bargains, and the affluent who are spending more freely on Gucci and other luxury brands as they feel encouraged by their rebounding stock portfolios.

Fourth-quarter profits look brighter, too, as Macy's and Bon-Ton Stores are raising their outlooks because they didn't have to discount heavily and saw sales improve.

"Retailers are breathing another sigh of relief," said Ken Perkins, president of RetailMetrics, a research firm. "There are more winners than losers." But he emphasized many shoppers were still tight with their pursesprings.

"The vast majority are still very focused on value and stretching every dollar. And that's not going to change for most of the year."

Michael P. Niemira, chief economist at the International Council of Shopping Centers, agreed, noting that consumers are "tiptoeing back though they haven't dramatically changed their shopping patterns."

The ICSC reported that January sales were up 3 percent compared with January 2009, following a 3.6 percent rise in December. The January figure is well above ICSC's forecast for a 1 percent gain. In January 2009, sales dropped 4.6 percent.

The numbers are based on sales at stores opened at least a year and are considered a key indicator of a retailer's health because it excludes the effects of new stores. The figures exclude Wal-Mart Stores Inc., the world's largest retailer which stopped reporting its sales on a monthly basis last year.

Many mall clothing stores including Limited Brands, Gap Inc. and Macy's announced solid sales increases. Even Abercrombie & Fitch, which had seen its teen customers defect to less expensive alternatives, saw a surprising sales increase, its first since April 2008.

Mall-based apparel stores enjoyed a 6.4 percent sales gain for January, the best performance since March 2007 when that segment had a 7 percent increase, according to the ICSC. However, January's figures are being compared with a 14 percent drop a year ago.

Luxury chains such as Nordstrom Inc. and Saks Inc. also had strong sales gains that well surpassed Wall Street expectations.

J.C. Penney Co., Stage Stores Inc. and teen retailer Wet Seal suffered declines. Target Corp. and Costco, excluding gasoline sales, had only modest gains.

January's strength came despite poor weather and limited racks of holiday clearance items.

January is the least important month of the year on retailers' calendar as stores use the period to clear out winter merchandise and bring in spring merchandise. For the holiday season, stores ordered so conservatively that they ended December with relatively little extra 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, providing little inspiration to buy.

Retailers have been benefiting from consumers' steadily improving mood as they latch on to more signs of recovery in the economy. But until the job market improves dramatically, many shoppers are likely to remain frugal.

Raising some concerns was the Labor Department's report, issued Thursday, that showed that the number of workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce.

The rise in claims is the fourth in the past five weeks. Most economists thought claims would resume a downward trend evident in the fall and early winter.

Economists surveyed by Thomson Reuters estimate that that the unemployment rate remained at around 10 percent in January despite a projected small gain in jobs when the government reports its monthly figures Friday.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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