Neither snow nor sleet kept shoppers from the post-holiday clearance sales, to the surprise of U.S. retailers. Merchants posted better-than-expected January sales results despite record snowfalls and icy weather that had caused several analysts to significantly lower their sales forecasts for the month.

Major retailers' comparable sales (for stores open at least a year) were up 4.1% on average during January, according to a tally by Thomson Reuters. That's nearly twice the growth rate forecast by many industry observers, who had cut estimates recently to the 2% range. Just this week, Thomson Reuters had lowered its estimate to 2.7% growth from 2.8%.

The numbers show that shoppers are slowly becoming less cautious about their spending, says Frank Badillo, senior economist at consultancy Kantar Retail. The company's monthly shopper survey shows consumer perceptions are stabilizing, with fewer households feeling less well-off financially in January, and the percentage planning to cut back their spending dropping for the third month in a row.

Most observers had expected the weather would compound the holiday letdown seen in the December sales results, which disappointed retailers when shoppers held back after November's early holiday season sales. Instead, January showed consumers still have spending power, if there is "a call to arms," such as early Black Friday deals in November, said Brian Sozzi, retail analyst at Wall Street Strategies. Bad weather in January also led to a "stock up now mentality," and consumers who did get out to the stores were not just window-shopping, he wrote in a note to investors.

"Browsing was not in the cards. Why waste a trip to the mall or big box center if the next day calls for 20 inches of snow?" he wrote.

The Weather Still Hurt

The weather wasn't completely ignored: Many retailers reported losing anywhere from 1 to 3 percentage points off their comparable-sales growth due to the snowstorms. For example, discounter Costco (COST), which posted a 9% increase in comparable sales, said that growth would have been 1 to 1.5 percentage points higher, while BJ's Wholesale Club (BJ), with a more modest 2.7% growth, said the weather shrank that number by 2.5 percentage points.

Many retailers reported the number of transactions was up over the same month last year, even as the average price paid per item was down, meaning shoppers are still bargain-hunting. Limited Brands, (LTD) reported a hefty 24% comparable-sales increase, thanks to a 35% increase at Victoria's Secret. Sales at the lingerie chain got a 10-percentage-point boost from the move of its semi-annual clearance sale from late December to early January. Limited did well enough to raise its guidance for fourth-quarter earnings to between $1.23 and $1.25 per share, from the previous guidance of $1.02 to $1.17.

At the other end of the spectrum, J.C. Penney (JCP), which reported comparable sales down 1.2%, blamed both the weather and low levels of clearance inventory for its poor sales. But Penney also raised its fourth-quarter earnings forecast to between $1.06 and $1.09 per share, up from a previous estimate of 90 cents to $1. Rival Kohl's (KSS), with sales up only 1.4%, also raised its guidance to between $1.65 and $1.66 for the fourth quarter from $1.62 to $1.66, and $3.64 to $3.65 for the year from $3.61 to $3.65.

Another suffering retailer, Gap (GPS), which posted only 1% comparable sales growth, also raised its earnings guidance to call for $1.85 to $1.86 per share for the year, up from the previous forecast of $1.77 to $1.82. Aeropostale (ARO), which also posted a 1% increase and was down 3% for the full quarter, raised its guidance from a range of 94 cents to 96 cents to a range of 96 cents to 97 cents per share for the quarter.

"Confidence Is Higher"


The January surprise echoes the first-quarter surprise seen in 2010, when retailers had expected a post-holiday drop and instead saw better-than-expected spring sales, notes Laura Gurski, a partner at consultant AT Kearney.

There are pockets of households with growing spending power, and they are shopping, if the retailers can draw them in with offers, she says.

"Potential here is growing, their confidence is higher. They see the deals out there in January. . .and they're going for the value," she says. "They were looking for a better deal."


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Robert & Lisa

Our socialist public educational system has indoctrinated our children into believing capitalism and freedom is bad and socialism is good. If Socialism is so good, why does the long time socialist government of Mexico boast of being the #1 producer of silver, plenty of oil, and the richest man in the world, yet 99% of their people are in the poverty level making an average of less than 6 dollars a day. Corruption is rampant. The evil, ultra rich see Mexico and want to implement socialism here, where they can have all of the wealth and power and the middle class will now be among the poor. That is what their Demoncrat puppets in the white house and senate are doing to us.

February 04 2011 at 3:12 AM Report abuse +5 rate up rate down Reply
1 reply to Robert & Lisa's comment
itacurubi

It's unfortunate that you had such a ho-hum education; otherwise, you might at least have the wherewithal to construct a more rubustly plausible straw man. Your description of the public schools is as flawed as it is hysterical. Calm down ... and eat more fish.

February 04 2011 at 9:06 AM Report abuse rate up rate down Reply
Robert & Lisa

Poeple are desperate to spend what little money they have before the massive inflation hits.

February 04 2011 at 3:12 AM Report abuse +6 rate up rate down Reply
1 reply to Robert & Lisa's comment
itacurubi

Then why has the savings rate increased? Do you just make this stuff up as you go? Or do you work from some sort of ideological master list? Your view has no basis in the real world: there is an extremely small inflation premium to be seen in bond prices and the savings rate has increased. Eat moer fish ... and get some disciplined instruction in economics.

February 04 2011 at 9:20 AM Report abuse rate up rate down Reply
martinsportraits

Yet another sell out jounalist on the Wall street payroll selling feel good love stories about how wonderful everything is .......How Dumb do they think we are ?

February 04 2011 at 2:06 AM Report abuse +4 rate up rate down Reply
GARY

Market still going UP???!!! What a JOKE. These CO'S are making BILLIONS of their money over seas with the BAIL OUT MONEY OBAMA STOLE from the TAX PAYERS HERE, while we are just trying to FEED and buy FUEL to get to our JOB, (IF YOU STILL HAVE ONE). The FAT CAT ELECTED, and their FRIENDS on WALL St. live like KINGS while the AVERAGE JOE STARVES!!! Once in France when the KINGS advisers told he the people were starveing because they had NO BREAD, the Queen said, "WELL LET THEM EAT CAKE"!!! We all know what happened to them!! WASHINGTON needs to worry about the mess in EGYPT, because they know if things do not improve SOON, they may be on the BLOCK!!!

February 03 2011 at 7:49 PM Report abuse +4 rate up rate down Reply
jktejas

Well, let's at least qualify what retailers......those in malls with ample or enough parking. I haven't even considered going to local shopping or my gym that requires street parking or a limited parking lot.....just impossible.

February 03 2011 at 4:31 PM Report abuse rate up rate down Reply
Richie

It's no surprise....Americans have been used to living beyond their means for some years now, and they're not about to stop. Millions of people spent money they didn't have, on credit, during the annual holiday spending orgy, and continue to do so now. They will spend themselves into oblivion, and when the dollar is devalued and the next inevitable crash occurs, they will be crying, because CASH is KING in a depression, and they won't have any ~~~ only massive DEBT one again. There used to be a time when Americans worked and , if they wanted something, "saved up for it" and paid in cash they HAD and could AFFORD.
THAT philosophy was what built America in its former glory days. Watch how this plays out.....we will replicate the events of Russia in the late 1990s when a massive depression hit, and what little money they had , became worthless. Three million Russians died unecessarily as a result. With the socialist government here in America building up a 14 trillion national debt with all the bailouts , stimulus, and handouts.....there will NOT be anymore for the next one! It will be much, much worse, and fat americans will finally slim down with no food to eat.

February 03 2011 at 4:11 PM Report abuse +6 rate up rate down Reply
scrappydobdo

We all need to stop listening to these useless speculators and so called annalist that are only inciting panic. It seems they have been proven wrong many times. We need to let the cards fall as they lay when the numbers come out.

February 03 2011 at 3:54 PM Report abuse +2 rate up rate down Reply
1 reply to scrappydobdo's comment
itacurubi

Let me get this straight ... you have enough knowledge and talent to call into question the work of professional financial analysts, yet you haven't yet mastered how to spell "analyst." Yeah. You're credible.

February 04 2011 at 9:11 AM Report abuse -1 rate up rate down Reply
HiBarbRayAndMeg

ebb and flow of demand. in this case pent up demand. And it appears Recession is over for now, until next time.. there will be a next time because watered down regulations with no teeth. of course to hear the corporations and the dumbing down of the GOP you would think regulations are killing the American Dream... makes one laugh to see it all unfold. and then cry.

February 03 2011 at 3:18 PM Report abuse -4 rate up rate down Reply
1 reply to HiBarbRayAndMeg's comment
GARY

RECESSION OVER HibarRayAndmeg???!!! You are either rich or living on another planet!!!

February 03 2011 at 7:52 PM Report abuse +3 rate up rate down Reply
dterraman

recent articles said exactly the opposite

February 03 2011 at 3:13 PM Report abuse +4 rate up rate down Reply
captmerit

who writes this P.R.?

February 03 2011 at 2:44 PM Report abuse +5 rate up rate down Reply