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Redbook average gains momentum

Responding to post-Christmas markdowns, and focusing in on home furnishings, consumers largely kept up their spending momentum during the first week in January. And same-store retail sales moved up by 1.9 percent, well ahead of a target of 1.5 percent, according to the bellwether Redbook Average.

But hewing true to form, it was the nation's big discounters that chalked up all of the gains, while their department store counterparts continued to languish.

Discounter same-store sales advanced by 4.9 percent, coming in well ahead of a targeted gain of 4.2 percent. But department stores fell shy of the mark, declining by 2.8 percent, slightly worse than the target of a 2.7 percent decline.

"Sales in the first week of January retained some of the momentum of the post-Christmas rush and overall were above plan," said Redbook analyst Catlin Levis. The themes were similar to the previous week with markdowns and weather-driven seasonal demand leading the way.

Levis noted, "Retailers continued to be promotional as they typically are in January, when winter goods are cleared to make room for incoming spring merchandise. Promotional clearances and price discounting, especially by stores with large stocks of unsold holiday goods, are expected to cut profit margins. January is predominantly a clearance month, and relative strength in merchandise categories showed evidence of continued seasonal bargain hunting."

Home goods, said Levis, "continued to be the leading selling items. Some discounters reported that consumption patterns had reverted to more normal patterns with a focus on basic commodities." Strongest sales were recorded in the Mid-Atlantic states and the Northeast, said the Redbook analyst.

Redbook Retail Sales Average
First week of January

Week ended 1/12 1/19 1/26 2/2 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Retail Sales Average, a unit of Instinet, a Reuters company.
Department Stores* -2.8 -2.8 -2.7
Discounters 4.9 4.9 4.2
Redbook Average 1.9 1.9 1.5

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