January '08 Sales Weak
January sales were weak, growing a scant 0.5 percent compared with the same month in 2007, according to the New York–based International Council of Shopping Centers. ICSC economist Michael Niemira said that the weakening economy sparked a consumer reaction.
“With uncertainty about the economy and the possibility of recession, consumers have pared their spending,” Niemira said.
Still, consumers’ more-conservative shopping habits contain an element of surprise for businesses, said Jack Kyser of the Los Angeles County Economic Development Corp. “People took out a significant number of gift cards during the holidays,” he said. “It does not seem like they have returned to stores to redeem them.”
The Washington D.C.–based National Retail Federation estimated that consumers spent $26.3 billion on gift cards during the 2007 holiday season. Rosalind Wells, NRF’s chief economist, said that the weak economy has made consumers anxious, and they have focused more on paying off debt than making new purchases in the past month.
Poor sales were felt across the entire spectrum of the retail sector. Discounter Target reported a decrease of 1.1 percent. Department stores Dillard’s, Macy’s and Nordstrom reported declines of 12 percent, 7.1 percent and 6.6 percent, respectively. Specialty stores Hot Topic, Pacific Sunwear and Wet Seal reported declines of 3.6 percent, 7.4 percent and 5.7 percent, respectively.
The month did bring some good news. Dallas-based Neiman Marcus reported an increase of 3.3 percent over the same time in the previous year. Hot Topic’s performance was stronger than expected, according to retail analyst Jeffrey Van Sinderen. The mall-based teen retailer was forecasted to have a decline of more than 7 percent.
“Their fashion accessories business has improved,” Van Sinderen said. “Their music business was strong.” Van Sinderen, who works for Los Angeles–based B. Riley &Co., said retailers’ business might improve later this year. “January is largely a throwout month,” he said. “There is so much clearance during the month. February and March are more important.”
The ICSC’s Niemira counseled against being too optimistic on sales increases in the near future. “Looking forward to February, we expect much of the same,” he said of the weak economy. “U.S. economic problems do not seem to be dissipating anytime soon.” —Andrew Asch
