- Associated Press - Thursday, February 3, 2011

NEW YORK (AP) — Retailers reported surprisingly solid January revenue gains Thursday that swept away fears that snowstorms in much of the country had chilled sales.

The reports, which are being compared with a respectable January 2010, offer encouraging signs that consumer spending is maintaining the momentum of the strong holiday season.

Many retail chains, including Costco Wholesale Corp., Victoria's Secret parent Limited Brands and Macy's Inc., posted gains that beat Wall Street expectations.

Luxury merchants Nordstrom Inc. and Saks Inc. also were bright spots as the affluent, encouraged by the rallying stock market, continue to lead the spending recovery.

The International Council of Shopping Centers index of 32 stores showed a robust 4.8 percent increase for January, well above the 1.5 percent to 2 percent range projected earlier in the week. January’s pace was above the 3.1 percent gain in November and capped retailers’ fiscal year, which averaged a 3.5 percent increase.

The figures are based on revenue at stores opened at least a year for Jan. 2 through last Saturday. It is considered a key indicator of a retailer’s health because it excludes the effects of stores that open or close during the year.

“Retailers weathered the storm both literally and figuratively,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “It is a signal that underlying consumer demand is pretty solid.”

Among the notable stragglers was Target Corp., whose business was below expectations, particularly in the South and Northeast.

J.C. Penney Co. reported an unexpected revenue decline; officials blamed lower levels of winter clearance compared with last January, as well as bad weather.

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. Still, the strength brightened fiscal fourth-quarter profit outlooks from Limited Brands, J.C. Penney and teen retailer Wet Seal Inc.

In recent weeks, analysts reduced their estimates as a series of snowstorms in several parts of the country kept shoppers at home and left them with little appetite for spring clothing.

Some retailers noted in their reports that snow did curb some spending. Underlying consumer strength remained strong, adding hopes for a sustainable economic recovery.

Shoppers got out more than expected, replenishing their wardrobes with boots, coats and other winter items to weather the storm as they took advantage of deals, said Ken Perkins, president of RetailMetrics LLC.

Another factor in boosting January’s sales index was the stellar performance of both Costco and Limited Brands, which combined contributed about 1.7 percentage points to the index, Mr. Niemira estimated.

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.

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