A Good Holiday For Retail

There is some good news for retail! January sales at top U.S. retail chains took a positive turn from last year’s decline, possibly because many avoided drastic clearance sales, and shoppers cashed in on the holiday gift cards.

Costco Wholesale Corp, and Limited Brands were among the number that came in ahead of Wall Street Expectations. Clothes retailers like Hot Topic and Wet Seal reported drops in sales that were even more dismal than were forecast.Twelve retailers were tracked by Thomson Reuters, and five of them beat estimates, while six came in below forecast. Eighteen additional store chains were due to report.

January is seen as the least important month of the holiday fourth quarter due to the fact that it accounts for the smallest portion of its sales. But the fact that retailers avoided the insane clearance sales that hurt January sales last year, and with consumers cashing in on gift cards received in December lends to the fact that some of these companies could raise their earnings forecasts.

Costco said that same store sales climbed by eight percent in January which is better than the 7.8 percent increase that was expected. The wholesale club also increased 25 percent at its international divisions. Sales at Limited Brands rose to 6 percent, topping the Wall Street predictions for a half of a percent increase. Retailers’ observations about sales trends — especially whether traffic weakened considerably at the end of January — may be a signal to how consumers will spend this quarter.

A number of analysts have concerns, holding the belief that the successful yet unexpected holiday sales pulled spending forward. That means that retailers might have a hard time recruiting shoppers in the first quarter, especially if cold weather trumps demand for spring merchandise. But all in all, good news. Really.

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