January '04 Surprise-Particularly for Department Stores
If buoyant Holiday sales delighted retailers, January’s economic picture should give them confidence for the rest of the year, said Michael Niemira, chief economist of the New York–based International Council of Shopping Centers.
“It was the strongest performance for one month since September 2003,” Niemira said, noting that retail sales across the nation grew 5.8 percent in January. “It was better than we anticipated and better than most retailers anticipated.”
The economy gained strength by late 2003, but the comeback was unsteady. This was one reason why many retailers anticipated a traditional January, a sleepy month when Christmas inventory is liquidated and profits are anemic. The robust start of 2004 took most retailers—especially department stores—by surprise.
“Indeed, department stores outpaced apparel specialty stores,” Niemira said. “Sales grew by 4.8 percent, and we haven’t seen that in years.”
Comparable-store sales grew by 2.8 percent at specialty stores and by 5.1 percent at discount stores, according to Niemira.
Niemira said the cashing in of Holiday gift cards contributed to the strong January sales, but he qualified this type of expenditure as a one-time spending spree. He also forecast a bright year for apparel.
“It’s been described as a stronger fashion cycle than in past years,” Niemira said. “There’s more use of colors. Hopefully, they will connect with consumers after a cold winter. They may also click with the consumer because they’re in a better economic position.”
Niemira said the better economic picture—partially the result of fewer seasonal layoffs in late 2003, compared with the same period in 2002—contributed to Minneapolis-based Target Corp.’s 11.9 percent increase in sales and Bentonville, Ark.–based Wal-Mart Stores Inc.’s 14.3 percent increase in sales over the same period last year.
The department store retailers that finished January with flying colors included Dallas-based Neiman Marcus Group Inc., Seattle-based Nordstrom Inc. and Menomonee Falls, Wis.–based Kohl’s Corp., which gained double-digit increases of 15.4 percent, 13.5 percent and 14.5 percent, respectively.
Fort Myers, Fla.–based specialty store Chico’s FAS Inc. experienced a brilliant January. Sales skyrocketed 49.8 percent, compared with the same period last year. Scott Edmonds, Chico’s president and chief executive officer, credited the success to customers’ early embrace of the company’s colorful spring product assortment. —Andrew Asch
