Blog: Icy chill hits January retail
Leonie Barrie | 6 February 2009
Following one of the weakest holiday seasons for decades, figures out last week confirmed retailers continued to struggle in January. But, it has to be said, while the numbers weren’t good, they could definitely have been worse. According to the International Council of Shopping Centers, January sales fell 1.6% - which is not nearly as bad as the 2-3% drop that was forecast.
Many retailers went into the month carrying lower inventories, while for others, cost cuts over the past year have started to pay off. Others still tried their best efforts to drive demand through promotions, clearance sales and fresh merchandise for the spring season.
As usual, the market divided into winners and losers. Head and shoulders above its competitors, discounter Wal-Mart Stores posted results above expectations as it benefited from customers trading down to cheaper items. Its US same-store sales rose 2.1%.
Other winners included teen retailers Aeropostale, which saw same-store sales up 11% and lifted its outlook, The Buckle (up 15%) and Hot Topic (up 6%) – all of whom offered the seemingly irresistible combination of the right merchandise at the right price.
Some of the worst performers included Children's Place (same-store sales down 11%), American Eagle Outfitters (down 22%), Abercrombie & Fitch (down 20%) and Limited Brands (down 9%). But while Gap Inc saw same-store sales plunge 23% - including a 34% slump at its Old Navy chain – it still managed to please the market by lifting its profit forecast.
Meanwhile, The National Retail Federation predicts sales will drop 2.5% during the first half of 2009 and end the year down 0.5% from 2008’s already-low levels. It also says the proposed US economic stimulus package is unlikely to boost consumer spending, and that a better solution would be a series of national sales tax holidays.
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