Several U.S. retailers reported mixed January sales results on Thursday, as consumers faced a hit to their take-home pay from higher payroll taxes, while cold weather may have helped spur purchases of winter clothes.
Costco Wholesale Corp. said January sales at stores open at least a year, or same-store sales, rose 4 per cent, slightly ahead of Wall Street projections for a 3.9-per-cent gain.
Limited Brands Inc. breezed past expectations, buoyed by its Victoria's Secret stores and a major improvement at its struggling La Senza chain.
Other retailers reporting stronger-than-expected sales were the teen-oriented Zumiez Inc., which raised its profit forecast, and department store chain Stage Stores Inc.
Over all, analysts expect 3.5 per cent same-store sales growth for January across 18 retailers, excluding drugstore chains Walgreen Co. and Rite-Aid Corp., according to Thomson Reuters I/B/E/S. That would be down from 4.4 per cent growth in January 2012.
U.S. consumer sentiment improved in January as Americans felt Washington's deal to avert the "fiscal cliff" at the beginning of the month boded well for the economy, a survey released last week showed.
But at the same time, tens of millions of Americans saw their take home pay fall because of a 2-percentage-point increase in payroll taxes.
Cato Corp., a specialty retailer offering low-price fashion, reported a 12-per-cent drop in same-store sales, and chief executive officer John Cato pinned part of the blame on the payroll tax. Cato lowered its profit forecast.
Department store operator Bon-Ton Stores Inc. as well as teen chains Buckle Inc. and Wet Seal Inc. also reported disappointing sales.
Other chains to report January sales later on Thursday include Macy's Inc., Target Corp. and Nordstrom Inc.
The index offers only a glimpse of retail spending as major chains like Wal-Mart Stores Inc., Sears Holdings and Best Buy Co. Inc. do not report monthly sales.
The colder midmonth weather in the eastern half of the country probably helped many retailers. January is a small month for retail sales, and retailers' profits are exposed to how much discounting they have to do to clear shelves to put in spring merchandise.
"We think cold weather has helped clear winter apparel," Morgan Stanley analyst Lauren Bellmare wrote in a note this week, and said there were generally lower levels of discounting at mall-based stores.