Good News/Bad News

Despite the better-than-expected January sales results that have been trickling in all week, many merchants and retail analysts are increasingly concerned that America’s retailers will have a tough time during the rest of the year, according to a report in The New York Times.

Over all, January same-store sales for specialty apparel and accessories rose 2.3 percent, according to a Goldman Sachs analyst issued yesterday — above the company’s prediction of 1.4 percent. But, the report noted, sales “were driven mainly by clearance/low-margin goods.”

The retail winners were mostly unsurprising. American Eagle Outfitters (Warren, Pa.) continued an impressive turnaround, recording a 22 percent increase in January sales. Sales at Bebe Stores (Brisbane, Calif.), another youth-oriented chain, were up 29.3 percent. In the luxury goods sector, Neiman Marcus (Dallas) posted a 12.2 percent rise.

But there were merchants who continued ongoing disappointing performances. Gap (San Francisco), the country’s largest specialty store chain, continued to worry analysts, with sales down 7 percent over all and off 16 percent at its Old Navy division. The Express, part of the Limited Brands (Columbus, Ohio), also fell by 16 percent.

Among department stores, Nordstrom (Seattle) posted a solid 8.8 percent rise, while sales at May Department Stores (St. Louis), which recently ousted its ceo, fell 7 percent.

Wal-Mart (Bentonville, Ark.), the country’s largest store chain, posted a gain of 2.5 percent. But sales at its arch-competitor, Target (Minneapolis), were up 9.4 percent.

The National Retail Federation said that its view was guarded about 2005, using words like “challenging,” “difficult and “cautious.” The group’s chief economist, Rosalind Wells, predicted a slowdown in the early part of this year that would affect the whole year, “forecasting mild 3.5 percent growth in retail sales for the year, compared to the robust 6.7 percent gain in 2004.” NRF ceo Tracy Mullin said, “Retailers are aware of the challenges they face in 2005.” She said consumers were facing higher energy costs and slower wage growth, both likely to hamper upward momentum in sales.

Mullin noted that last year’s strong numbers make comparisons difficult. “The economy is stable,” she said, “but it means trying to get that uptick is harder.”

One analyst told The Times: “Fashion is somewhat stale. We’re in the second year of the current color trends and in the third year of the current renaissance in luxury goods. Then there is the specter of higher interest rates, which will hurt everyone.”

A hopeful sign, he said, is higher job growth, “and the consumers’ almost irrational desire to spend on new items — whether they need them or not.”

For an ongoing update of retailers’ sales performances, follow the Retail Financial Reports channel on this web site.