- The Washington Times - Thursday, February 8, 2007

Retailers rebounded from sluggish holiday sales last month as shoppers cashed in gift cards and cold temperatures prompted them to buy scarves, hats and coats.

Department stores continued their own rebound in January, following years of lackluster sales, with Nordstrom Inc., J.C. Penney Corp. Inc., Kohl’s Inc. and Federated Department Stores Inc., which owns Macy’s and Bloomingdales, meeting or beating Wall Street estimates.

On average, sales rose 6.7 percent, according to the International Council of Shopping Centers, a New York trade group. Luxury retailers, such as Nordstrom Inc., Neiman Marcus and Saks Inc., posted sales jumps of about 11 percent.

January traditionally has been the slowest sales month of the year, as shoppers stay clear of the malls after the holiday rush. But the month is gaining significance to retailers as gift cards become more popular. Gift cards aren’t counted in retailers’ books until they are redeemed, and many are cashed in during January.

“As expected, consumers redeemed their gift cards in earnest in January giving retailers an added boost for the 2006 fiscal year,” said Michael Niemira, chief economist and director of research at ICSC. “In addition to gift cards, the late arrival of winter gave consumers the push they needed to finally purchase seasonal merchandise and help retailers reduce their winter-related inventories.”

Sales rose an average 3.7 percent during the month for the 51 U.S. chains the ICSC tracks. The group had predicted a 3 percent increase.

In November and December, sales rose 3.5 percent and 3.1 percent, respectively. Retailers were hurt this holiday shopping season by unusually warm weather in most of the country, which left shelves of scarves and parkas untouched, and their books were hurt by strong sales of gift cards instead of merchandise.

Last month, sales at discounters and apparel chains didn’t do quite as well as department stores. Apparel and discount store sales rose 3.3 percent and 2.6 percent, respectively.

Sales at Wal-Mart Stores Inc., the world’s largest retailer, rose 2.2 percent, beating the company’s forecast.

The big winners were American Eagle Outfitters Inc. and Limited Brands Inc., which owns Victoria’s Secret, Express and Bath & Body Works. Abercrombie & Fitch and Ann Taylor Retail Inc. saw large sales drops.

Sales at Gap Inc. were unchanged from a year ago, better than the 7.6 percent drop analysts had expected. Most of that increase came from its Banana Republic stores, where sales rose 14 percent. Sales at Gap branded stores and Old Navy stores fell 6 percent and 1 percent, respectively.

The chain struggled over the holidays with disappointing sales.

February’s outlook was mixed. Some retailers, including J.C. Penney, warned that sales increases could be in the low single digits.

Analysts said the positive sales in January, in addition to a boost from Valentine’s Day sales, would help February sales.

“The underlying numbers suggest a strong start to the year,” said Frank Badillo, senior economist at Retail Forward, a Columbus, Ohio, research firm. “Shoppers were out in force as a result of gift cards, the let-up in gas prices and favorable weather.”

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