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A mixed look at the economy

January sales beat forecasts, retailers report

NEW YORK -- The nation's retailers got a second wave of holiday sales in January thanks to billions of dollars in gift cards.

A diverse group of merchants from Wal-Mart Stores to Abercrombie & Fitch said yesterday they had better-than-expected sales last month as shoppers returned to stores to use gift cards they got for the holidays. Milder weather helped the sales spurt, putting consumers in the mood to buy for spring.

The ever-increasing popularity of gift cards is changing the way merchants look at their business in January, which historically has been the least significant month on the retail calendar. Since the stores don't book sales from gift cards until they're redeemed -- and since shoppers generally spend more than the face amount on the cards when they're using them -- the cards are giving stores an opportunity for a sales surge well after the holidays end.

January traditionally is a time for clearing out winter goods and preparing sales floors for the spring. But as last month's business showed, consumers are willing to spend, especially when they're armed with gift cards, and they're willing to pay full price, too.

Other winners last month included Target Corp., wholesale club operators such as Costco Wholesale Corp., and midprice and upscale department stores such as Nordstrom and J.C. Penney. Even Gap Inc., which has been struggling to find the right fashion formula, turned in a sales performance that pleased Wall Street.

The International Council of Shopping Centers-UBS sales tally of 65 retailers posted a 5.1 percent gain, better than its forecast of up to 4 percent.

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