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January retail sales slow slightly

With post-holiday sales starting to cool off, retail sales lost some of their momentum during the second week of January and advanced by 1.4 percent over prior-year levels, slowing down from a stronger 1.9 percent increase the week before, the Redbook Retail Sales Average reported.

For the two weeks month-to-date, same-store retail sales advanced by 1.6 percent, narrowly ahead of a targeted gain of 1.5 percent, with discounters leading the way as department stores continued to struggle.

"Some retailers lost momentum, perhaps signaling that the steady run of sales gains that took place during the holiday season was over," commented Redbook analyst Catlin Levis. "Consumers' appetite for clearance bargain hunting was for the most part satisfied. Below-plan performance at department stores was offset by strength at discount stores."

Discounter sales climbed higher by 4.8 percent during the second week of January, slightly off the 4.9 percent increase of the week before. Month-to-date sales at the nation's mass merchants climbed up by 4.9 percent, easily beating a target of 4.2 percent.

But department store sales continued their long slide, falling off by 4.0 percent and weakening further from a 2.8 percent drop the prior week. So far in January, department store sales have fallen by 3.4 percent, compared with a smaller forecast decline of 2.7 percent.

"The promotional focus for the week was on seasonal apparel, but retailers also reported strength in other areas including non-seasonal clothing, fitness equipment, electronics, consumer basics such as food and household supplies and a range of home-related items, including furniture, appliances and hardware," said Levis. "It showed a return to more normal operating conditions following the holiday season."

The Redbook analyst noted, "Lists of sales leaders varied widely from store to store, which is fairly typical of a transitional, trendless, promotion-driven month. Retailers are staying very cautious by keeping their upcoming spring and summer inventory levels tight until they see signs that the economy is growing again — meaning that companies will not need to offer as deep of a discount to clear excess inventories. Since January also typically generates the smallest dollar amount of annual sales, its volatility is considered to have a limited effect on quarterly earnings targets."

Redbook Retail Sales Average
Second 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 -4.0 -3.4 -2.7
Discounters 4.9 4.8 4.9 4.2
Redbook Average 1.9 1.4 1.6 1.5

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