Blog: Leonie BarrieJanuary spending spells good news

Leonie Barrie | 21 February 2011

There was good news for retailers in the US and UK last week as official figures showed shoppers managed to shrug off a number of obstacles including bad weather and tax rises to lift January sales.

Spending at US retailers edged up for the seventh month in a row. And while sales at clothing and accessory stores were 0.3% lower than December, they were 1.8% higher year-on-year.

In the UK, the volume of retail sales grew by 1.9% from December to January and was 5.3% higher than last year. But analysts cautioned the figures were skewed by post-Christmas discounting and easy comparison with earlier numbers.

Overall, the results suggest consumers are slowly getting more comfortable spending again but continue to remain cautious. Sustained growth in 2011 will largely rely on improvement in key economic indicators like employment and housing.

For US discount retailer Family Dollar Stores, last week brought news it is the target of an unsolicited takeover offer from investment firm Trian Group, the fund run by activist US investor Nelson Peltz. The bid could value the retailer at more than $7bn, and comes after Trian built up an 8% stake in Family Dollar, making it the company's largest shareholder.

In common with most apparel brands and retailers, teen clothier Abercrombie & Fitch has accepted that rising ticket prices are a necessary evil to help combat escalating input costs. But the clothing company has also acknowledged that it will be easier to introduce higher prices to its customers overseas than to shoppers in its domestic stores.

"We are anticipating double-digit cost increases for the fall 2011 season," CEO Mike Jeffries told analysts after the retailer released its fourth quarter and full-year earnings.

The spread of workers' strikes across Egypt last week hit Arafa Holding, the country's biggest garment exporter, which was forced to close its Swiss Garments, Egyptian Tailoring and Goldentex factories in 10th of Ramadan city. But after reaching a deal with striking workers, production was due to resume again at the weekend.

Earlier this month Arafa said production was back to full capacity after two weeks of political unrest, and that none of its orders had been cancelled.

Meanwhile, last month's 'Jasmine Revolution' in Tunisia is likely to have little or no impact on the performance of the country's textile industry in 2011, according to the government-run textile technical centre CETTEX. At the height of the protests, curfews made it difficult for firms to operate normal working hours, and disrupted production and export shipments. 


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