January Retail Sales Weak on Leveraged Consumers

123jump.com Staff
07 Feb, 2008
New York City

Retailers reported weaker than anticipated same store sales rise in January. Discounts at several department stores failed to attract customers to stores as they grapple with economic anxities. Falling home values, tight credit conditions, and rising energy and gasoline prices have sapped consumers appetite for retail goods. Wal-Mart reported lowest same store sales rise in thirty years and most apparel retailers sales in January declined. Costco reported 3% rise at domestic locations.

[R]10:30AM New York – Discounts fail to persuade consumers to return to retailers.[/R]

U.S. averages fell in the first thirty minutes of trading after retailers reported January same store sales, cautious outlook from Cisco, and higher than expected unemployment claims.

January Retail Sales

Same store sales in January fell more than expected by most analysts. Wal-Mart reported same store sales increased 0.5% in the month, lower than the company’s guidance of 2%. Sales at Wal-Mart stores fell 0.2% and at Sam’ Club increased 2.1%. For the fiscal year, same-store sales at U.S. locations rose 1.4%, lowest growth in the last thirty years of data tracking at stores.

Target sales in January fell 1.1%.

Retailers are bracing for one of the toughest years as consumers tackle rising energy and gasoline prices, falling home values, tighter credit conditions, and stagnant wages.

Costco Wholesale Corp, reported 7% rise in January same store sales across the company but sales increased 5% at domestic locations, only 3% when gasoline sales are excluded, and currency adjusted gain of 9% at international locations.

Department stores lowered prices on several products at mall based locations to attract buyers and rev up the gift card spending. However consumers kept their spending in check.

Apparel retailers reported drop in sales as customers avoid discretionary purchases. J C Penney sales declined 1.9%, sales at Limited dropped 8.1%, at Macy’s fell 7.1%, and at Gap fell 2%. Saks bucked the trend and reported 4.1% rise in sales.