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Retailers report solid Feb. sales

Commodity prices threaten growth

A shopper noted television prices at Costco in Glendale, Calif., on Monday. Retailers reported solid revenue increases for February, extending momentum from a strong holiday season. A shopper noted television prices at Costco in Glendale, Calif., on Monday. Retailers reported solid revenue increases for February, extending momentum from a strong holiday season. (Damian Dovarganes/Associated Press)
By Anne D’Innocenzio
Associated Press / March 4, 2011

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NEW YORK — Strong February sales at stores up and down the price spectrum, from J.C. Penney Co. to Saks Inc., show that a broad range of shoppers are feeling more comfortable about the economy.

The question is whether rising gas, food, and clothing prices will reverse the trend this spring.

Retailers yesterday reported surprisingly strong revenue gains for February. The International Council of Shopping Centers’ index of 28 retailers rose 4.2 percent compared with the same month last year. That was well above the trade group’s projections for a 2.5 percent to 3 percent increase.

The showing follows a 4.7 percent increase in January and the best holiday season since 2006. The figures are based on revenue at stores open at least a year, a key indicator of a retail health.

February started slowly for merchants because snowstorms kept some shoppers home.

“The underlying [spending] trend is quite good,’’ said Scott Hoyt, senior director of consumer economics for Moody’s Analytics. “But increasing costs on basic necessities [are] a growing constraint on household budgets. The question we don’t know is: By how much?’’

Yesterday’s results show that a broader range of shoppers is benefiting from the economic recovery, said Michael P. Niemira, chief economist at the International Shopping Centers.

Among retailers beating forecasts were Victoria’s Secret parent Limited Brands Inc.; moderate-priced department stores Penney and Macy’s Inc.; teen clothing seller Wet Seal Inc; and warehouse club operator Costco Wholesale Corp.

Luxury retailers including Saks Inc. saw surging sales as the affluent kept spending, encouraged by a rallying stock market.

The improving economy is fueling the growth. Consumer confidence in February rose to its highest point in more than three years, according to the Conference Board.

But the positive economic news isn’t dispelling worries about rising prices. Analysts say more price shocks could scare consumers, especially low- and middle-income people, into pulling back on spending.

Clothing makers are raising prices on everything from underwear to jeans. Supermarkets are beginning to pass along rising costs for dairy, meat, and other items.

But gasoline is the most worrisome. If prices hit $4 a gallon, shoppers will change their habits, said Ken Perkins, president of RetailMetrics. They’ll cut back on discretionary purchases and make fewer trips to the mall.

Another challenge for retailers in March will be a late Easter. It doesn’t fall until April 24, three weeks later than last year.