Cold and Gift Cards Spark January '07 Surprise
Traditionally, January is a sleepy month when retailers concentrate on cleaning out inventory for the crucial Spring season. However, January, 2007 broke the rules.
Instead of reporting the decent business expected by analysts, many retailers beat forecasts.
According to the New York–based International Council of Shopping Centers, the entire retail sector performed better than expected. The ICSC initially forecast a January performance increase of 3 percent compared to the same time of the previous year. Instead, the sector posted a strong 3.7 percent increase. Among the strong performers were luxury stores, which grew 11.2 percent in January, department stores, which increased sales 6.7 percent, and apparel chain stores, which reported a sales increase of 3.3 percent. The ICSC’s chief economist, Michael Niemira, credited the surprising strong sales of January with gift-card redemptions and a cold snap.
“As expected, consumers redeemed their gift cards in earnest in January, giving retailers an added boost for the 2006 fiscal year,” Niemira said. After an unseasonably warm fall and winter, cold weather in January sparked a demand for winter clothes. It gave retailers the opportunity to clear out their winter inventory.
Luxury department stores Neiman Marcus, Nordstrom and Saks all reported stellar January performances. Dallas-based Neiman Marcus reported a same-store sales growth of 11.3 percent. Seattle-based Nordstrom posted comparable-sales increase of 11.1 percent. Birmingham, Ala.–based Saks reported an 11.4 percent increase.
The outlook may continue to be bright for many retailers. St. Louis–based financial firm A.G. Edwards & Sons forecast that retail’s comparable-store sales might increase at a steady pace of 2 percent to 3 percent in the next few months.
The January surprise did not reach all retailers. California-based retailers Gap, Pacific Sunwear and Hot Topic reported declines for much of 2006. In January, San Francisco–based Gap reported flat comparable sales, Hot Topic’s same-store sales dropped 6.6 percent, and Pacific Sunwear stumbled when it posted a decline of 7.7 percent. —Andrew Asch
