Major U.S. retailers shrugged off the snowiest January in six years to post sales that blew past analyst expectations, easing concerns that consumers were all spent out after the holidays.
Retailers posted a 4.2 percent increase in sales at stores open at least a year, beating analysts' expectations for a 2.7 percent gain and exceeding a year-earlier rise of 3.3 percent, according to Thomson Reuters data.
But some cautioned against being too optimistic as unemployment remains high and the U.S. economic recovery remains uncertain.
We expect the economic environment to remain challenging, Target Corp Chief Executive Officer Gregg Steinhafel said. The discount chain reported a 1.7 percent rise in sales at stores open at least one year, below the analysts' average forecast of 1.9 percent, on weak demand for expensive items such as electronics.
The American consumer is still very focused on value, said Sherif Mityas, a partner in the retail practice of global management consulting firm A.T. Kearney.
Like Target, many retailers managed their inventory well, meaning fewer clearance goods in a typically promotional month. But this disappointed bargain-hungry shoppers.
Victoria's Secret parent Limited Brands Inc and warehouse club operator Costco Wholesale Corp were some of the bright spots among retailers that reported January sales on Thursday.
Limited Brands, which has won praise from analysts for its efforts to become a destination for small gifts, reported a 24 percent rise in same-store sales, well past the analysts' average estimate of 6.7 percent.
Other retailers were not so lucky as the snowiest January in six years played havoc with hopes of a strong ending to the holiday season. The weather curbed shopper traffic in malls and stores, especially in the Northeast, where there were multiple snowstorms.
Retailers whose sales missed analysts' expectations included Abercrombie & Fitch Co and J.C. Penney Co Inc. Penney, however, raised its quarterly profit estimate as it kept expenses and inventory under control.
January is the smallest contributor to the all-important fourth quarter for retailers.
On Wednesday, mall-based teen apparel chain Hot Topic Inc reported a 3.3 percent fall in January same-store sales, while analysts expected only a 2.8 percent decline. On the other hand, Zumiez beat estimates with a 15.3 percent rise in same-store sales.
U.S. shoppers cut back on shopping in January after opening their wallets during November and December, helping U.S. retailers post their best holiday sales in six years.
Claudia Carrmoma was one of those consumers. After scooping up discounts on clothes in December, she hardly shopped in January. The 38-year-old New Jersey resident, who works at a jewelry store in Manhattan, said her spring shopping depends on the money I make.
I feel like I should save now, Carrmoma said. (Reporting by Dhanya Skariachan; editing by Lisa Von Ahn)