Major retailers are reporting surprisingly solid January revenue gains despite snowstorms that many feared would chill spending.
The reports offer encouraging signs that strength in consumer spending is being sustained after a robust holiday season.
As merchants reported their figures Thursday morning, many retailers, including Costco Wholesale Corp, Victoria's Secret parent Limited Brands and teen retailer Wet Seal Inc., posted gains that beat Wall Street expectations.
A notable straggler was Target Corp., whose business was below expectations, particularly in the South and Northeast. The figures are based on revenue at stores opened at least a year and are considered a key indicator of a retailers' health.
"The early going looks good, despite the multiple snowstorms," said Ken Perkins, president of RetailMetrics LLC, a retail research firm. "It's encouraging, and you're seeing other economic signs that things are turning around."
January is the least important month of the year for retailers because they use the month to clear out winter goods to make room for spring merchandise.
In recent weeks, analysts had racheted down expectations as a series of snowstorms in several parts of the country kept shoppers at home.
But it looks like consumers continued to shop, adding hopes for a sustainable economic recovery. Consumer spending was the main reason the economy grew at an annual rate of 3.2 percent in the final three months of 2010, the Commerce Department said Friday. It was up from 2.6 percent the previous quarter and the best since the start of last year.
Costco had a 10 percent gain in revenue at stores opened at least a year; Analysts surveyed by Thomson Reuters expected an increase of 7 percent.
Target Corp. had a 1.7 percent increase in revenue at stores opened at least a year, slightly below the 1.9 percent gain that Wall Street projected.
Target CEO and Chairman Gregg Steinhafel said business was particularly weak in the South and Northeast, regions hit hard by snowstorms. But he noted that the chain's expansion into food and its 5 percent discount for those who pay with its credit or debit card should drive increases this year.
Limited, fueled by its Victoria's Secret division, enjoyed a stellar 24 percent gain in revenue at stores opened at least a year and boosted its profit outlook for the fourth quarter. That was better than the increase of 6.7 percent that Wall Street expected.
Gap Inc. posted a 1 percent increase in revenue at stores opened at least a year, much better than the 3.1 percent decline that Wall Street expected. Among teen retailers, Wet Seal enjoyed a 6.2 percent gain, well surpassing the 4.0 percent decline that Wall Street anticipated.
Teen store The Buckle's revenue at stores opened at least a year rose 4.3 percent, less than the 5.7 percent gain expected from Wall Street.
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