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Retails sales slower than expected

Even though colder weather across much of the country spurred sales of outerwear and other warmth products, same-store retail sales came in somewhat weaker than expected during the second week of January. Sales moved up by 3.4 percent, off the 3.8 percent pace of the week before, the Redbook Retail sales Average reported.

With sales softer than hoped for moving into January, sales for the two weeks month-to-date were up 3.6 percent from year-before levels, shy of a targeted gain of 3.9 percent. Sales were up slightly, by 0.1 percent, from the same two-week period during December, falling short of a target of a 0.4 percent increase.

"Retail sales cooled off somewhat in the second week notwithstanding record cold weather, especially in the Northeast, which lifted demand for seasonal merchandise such as winter outerwear, accessories and electric heaters," said Redbook analyst Catlin Levis.

But performance varied with each retail sector, she noted, with department stores sharply missing plan, while mass merchant business held relatively steady. Department store sales edged up by 1.8 percent, weakening after a 2.3 percent gain the prior week. Mass merchant sales were up by 4.3 percent, modestly off the 4.6 percent gain during the first week of the month.

"Department stores are typically volatile in January as they work through the annual clean-out of winter inventories and drive sales through pricing and advertising. Most discount store sales returned to more normal operating conditions after the holiday, with sales led by demand for basic consumables," she said.

Moving past the holidays, "Retailers said sales focus is on shifting goods to make way for spring merchandise," Levis observed.

Hoisting a yellow caution flag, Levis said consumers are showing signs of having maxed out or overspent during the holidays.

Redbook Retail Sales Average
Second week of January

Week ended 1/10 1/17 1/24 1/31 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Research Inc.
Department stores* 2.3 1.8 2.1 2.5
Discounters 4.6 4.3 4.5 4.7
Redbook Average 3.8 3.4 3.6 3.9

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