Weak January figures show consumers are wrestling with high gas and food prices, and buying mostly necessities.
NEW YORK — The nation’s retailers delivered more evidence of a stumbling economy Thursday, as merchants reported their weakest January performance in nearly four decades, extending a malaise that has deepened since the holiday-shopping season.
Though Costco Wholesales’ monthly sales beat estimates, disappointment cut across all sectors as discounters like Wal-Mart, teen retailers including Pacific Sunwear and mall-based apparel chain Limited Brands posted weak or declining sales. Even affluent shoppers are pulling back, hurting Seattle-based Nordstrom.
January’s sales figures made it clear that consumers wrestling with high gas and food prices, a slumping housing market, an escalating credit crisis and a weakening job market retrenched further, buying mostly necessities even when redeeming their holiday gift cards.
“Clearly, this is a reflection of a very difficult environment for the consumer,” said Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. “It looks like consumer spending is stalling.”
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Nonetheless, shares of a number of retailers rose as many either backed their earnings forecast or even raised guidance, signaling that they were able to control their inventories. Wal-Mart stuck with its earnings forecast, while Pacific Sunwear and Gap raised their profit outlooks despite sales drops.
Shares of Issaquah-based Costco rose $1.04 to close at $64.75 Thursday. Nordstrom stock gained $1.34 to $37.67.
The UBS-International Council of Shopping Centers preliminary sales tally of 43 retailers rose 0.5 percent last month, well below the original 1.5 percent forecast. The results followed an anemic 0.7 pace in December and were below last year’s same-store sales average gain of 2.1 percent.
Michael Niemira, the council’s chief economist, said January’s performance was the weakest ever, according to records that go back to 1970. It is based on same-store sales, or sales at stores open at least a year.
Thursday’s results extended a streak of news that showed more signs of consumer strain. Consumer spending accounts for two-thirds of economic activity, and their outlays appear to have stalled from an already slowing pace seen over the past year.
Wal-Mart noted in its release Thursday that gift-card redemptions were below expectations and that customers appear to be holding gift cards longer and “using them more often for food and consumables rather than discretionary purchases.”
And while investors are hoping the Federal Reserve can avert a recession with a series of rate cuts, some economists say the moves may be too little, too late. Analysts also say that while the government’s proposed economic-stimulus package, which offers rebate checks for more than 100 million Americans, could help reignite spending, the lift would only be temporary.
As Perkins said, if the job market continues to deteriorate, “all bets are off.”
Janet Hoffman, managing partner of the North American retail division of the consulting firm Accenture, agreed, noting she expects “some relief” but nothing “radical.”
“Consumers have exhausted all the avenues to get access to credit,” she added.
Wal-Mart, the world’s largest retailer, reported a 0.5 percent gain in same-store sales. Analysts surveyed by Thomson Financial had expected a 2 percent increase. The company said it continues to do well with staples like groceries but that home furnishings remain weak.
Target falls short
Rival Target reported a 1.1 percent decline in same-store sales in January, worse than the 0.6 percent analysts expected.
Costco, however, reported a 7 percent gain in same-store sales, surpassing the 6.6 percent estimate.
Within the department store sector, J.C. Penney had a 1.9 percent decline in same-store sales, though the results were better than the 6.3 percent Wall Street expected.
Upscale Nordstrom suffered a 6.6 percent same-store sales decline, much worse than the 0.7 percent decrease expected.
Macy’s on Wednesday reported a 7.1 percent decline in same-store sales, worse than the 5.9 percent decrease. The company also said it was cutting about 2,300 management jobs as the department-store operator consolidates three regional divisions and decentralizes buying to reduce costs and boost sales.
Limited Brands reported an 8 percent drop in same-store sales last month, worse than the 6.9 percent forecast.
Among teen retailers, Abercrombie & Fitch had flat same-store sales, matching Wall Street expectations.
Everett-based action retailer Zumiez reported Wednesday its sales were up 1.7 percent for January, compared with a 12.4 percent increase in the same period last year. Shares of Zumiez climbed $1.78 to close at $19.99.