NEW YORK (AP) — Sometimes, the devil is in the deals.
Americans shopped the winter clearance racks in January, resulting in strong sales during the month for retailers. But spending is expected to slow as the deals dry up, and as Americans begin to digest rising gas prices and a 2 percent payroll tax hike that started in January.
Noelle Perillo, 34, was certainly lured in by deals last month — she spent $100 on discounted holiday ornaments, home items and clothes for her toddler son — but she also says she may cut back going forward.
"I have what I need, and I am kind of shopped out. I'm set for now," says Perillo, a freelance public relations consultant who lives in Silver Springs, Md. "When I hear things like gas prices spiking, that's a concern." Overall, 20 retailers reported on Thursday that revenue at stores opened at least a year — an indicator of a store's health — rose an average of 5.1 percent, according to the International Council of Shopping Centers. That's above the trade group's 3 percent estimate. It also marks the highest reading since last August when the figure was up 6 percent.
A group representing just about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue. Still, the data offers a snapshot of consumer spending, which has been heavily influenced by discounts during the economic downturn.
Retailers had already discounted heavily during the holiday season to get people to buy. January, which typically is the time when stores have clearance sales on winter merchandise to make room for spring items, caused them to slash prices even more.
But once the clearance goods disappeared last month, so did shoppers. Analysts say the absence of big discounts — coupled with the higher payroll tax and gas prices that have risen for the past 20 days — caused sales to taper off in the last week or so of the month. Such pressures also hurt consumer confidence last month, which fell to the lowest reading in 14 months, according to the Conference Board.
Cato Corp., which sells moderately-priced women's and girls' clothing, said sales worsened throughout the month because of delays in shoppers' tax refunds and the hit to their income from higher payroll taxes. As a result, the company, which runs about 1,300 stores in the U.S., said revenue dropped 12 percent in January.
"Sales at the beginning of the month were in line with our year-to-date-trend," John Cato, Cato's CEO, said in a statement. "However sales at the end of the month were significantly worse than trend. We think this was primarily due to the timing of tax refunds and the effect of higher payroll taxes." Overall, January was good for most retailers, though.
Macy's, which runs Bloomingdale's and Macy's stores, said revenue rose 11.7 percent in January, nearly doubling the 6.4 percent increase analysts polled by Thomson Reuters had expected. And the retailer raised its fourth-quarter adjusted earnings forecast due to its strong performance in January.
Gap Inc., the owner of the Gap, Old Navy and Banana Republic chains that has struggled to regain its relevance, said its January revenue rose 8 percent on strength in its North American stores. That's above the increase of 4 percent Wall Street expected.
Meanwhile, Target Corp., a discounter that sells everything from clothes to home goods to groceries, reported a solid 3.1 percent increase in revenue, helped by strong sales of clearance items. That beat the 1.7 percent estimate from Wall Street.
Despite the strong showing, Gregg Steinhafel, Target's CEO, said its customers "continue to shop with discipline in the face of a slow economic recovery and new pressures, including recent payroll tax increases." As a result, Steinhafel said Target remains "focused on providing unbeatable value combined with a superior guest experience in both our stores and digital channels." Going forward, analysts say that retailers may have a tough time luring in shoppers.
"Consumers were shopping and hunting for those clearance items," said Michael Niemira, chief economist at the ICSC, the trade group. "Despite the strong reading, January may be one of the highest points of the year."
Shoppers expected to disappear after the clearance sales
NEW YORK (AP) — Sometimes, the devil is in the deals.
Sports in Brief: TC's Johnson picked up by Twins
The Minnesota Twins purchased the contract of Traverse City Beach Bums All-Star closer D.J. Johnson, signing him to a two-year deal. The Twins will be the third affiliated organization for Johnson. (Plus more)Continued ...
New website is a trail-blazer
A new interactive website will provide outdoor enthusiasts a one-stop user’s guide to 5,300 miles of trails across Michigan's northern lower peninsula.Continued ...
MacMaster won't have mother's vote
State Senate candidate Greg MacMaster gained endorsements from political officials in his opponent's hometown, including Traverse city's mayor, but primary foe Wayne Schmidt swiped a different sort of political prize: support from MacMaster's mother.Continued ...
UPDATE: Authorities continue to investigate homeless man's death
Traverse City police are awaiting toxicology reports to see if drugs or alcohol factored in a local homeless man's death.Continued ...
Three Republicans hope to represent Antrim County in Lansing
A teacher, a handyman and a semi-truck driver all want to be the Republican candidate for Michigan’s 105th House seat.Continued ...
Students present research findings at National Air and Space Museum
Three Traverse City West Senior High School students took a trip to the Smithsonian National Air and Space Museum in Washington, D.C., but it wasn't just to see the sights.Continued ...
NMC could lease Shadowland Motel
Northwestern Michigan College officials will discuss a plan to increase student housing by leasing a local motel.Continued ...
Sheriff's deputies warn of fraudulent law enforcement calls
Grand Traverse County sheriff's officials are asking residents to call authorities if they receive phone calls from someone stating they missed jury duty and must pay a fine or face arrest.Continued ...
Triebold, LaJoie still the team to beat in Au Sable race
Can anyone seriously challenge the defending champs? That’s the biggest question going into the 67th annual Au Sable River Canoe Marathon race Saturday evening.Continued ...
2014 All-Region Girls Track Team
The Traverse City Record-Eagle's picks for the 2014 All-Region Girls Track team:Continued ...
2014 All-Region Boys Track Team
The Traverse City Record-Eagle's picks for the 2014 All-Region Boys Track team:Continued ...
Embezzlement from Park Place Hotel suspected
Police are investigating an embezzlement complaint at the Park Place Hotel.Continued ...
Letters to the Editor: 07/26/2014
Are shoppers safer?; No info monopoly.Continued ...
Education Newsmakers: 07/26/2014
Jared Ornelas, of Lake Leelanau, was named to the Dean’s List at Lake Superior State University, Sault Ste. Marie, for spring semester 2014. (Plus more)Continued ...
New street magazine helps homeless
Randy Parcher has lived in a van with his girlfriend for three years. He helps support the couple by day selling his art work, which he creates at public spaces like the library or coffee house. He burrows down in a pile of blankets at night and relies on body heat to stay warm.Continued ...
Body & Soul in Brief: 07/26/2014
Arcadia Daze luncheon; Grief workshops; Church histories. (Plus more)Continued ...
Blood Drive Calendar: 07/26/2014
Area Blood Drives: American Red Cross - Gaylord, 10 a.m.-3:45 p.m., July 30, F.O.E. Eagles Club, 515 S. Wisconsin Ave. (Plus more)Continued ...
Homeless man identified
Traverse City police released the name of a local homeless man whose death is under investigation. Robert Lee Howard, Jr., 62, died Thursday in the emergency room at Munson Medical Center.Continued ...
Leelanau County meth lab discovered, investigation continues
A Cedar man and Suttons Bay woman were arrested for maintaining a drug house in Centerville Township, the first meth lab found in the county, Leelanau County Sheriff Michael Borkovich said.Continued ...
Authorities investigate overdose death
Traverse City police are investigating the death of a homeless man who investigators considered a witness in the recent beating death of another homeless man.Continued ...
E. coli levels back down
It's safe to swim again. Bacteria levels at four Grand Traverse Bay beaches are back down after they elevated briefly on Wednesday.Continued ...
Ag Forum: Rebuilding 'foodshed' and community resilience
In my previous life as a reporter for the Record-Eagle from 1986 to 1998, I remember reporting on two words that were new to me at the time.Continued ...
Community in Brief: 07/25/2014
Christmas in July; Artist’s reception; Solar viewing party. (Plus more)Continued ...
Bums fall in slugfest
With 21 runs scored on 28 hits, it was not an easy night for the 10 pitchers who took the mound for Thursday’s game between Traverse City and host Schaumburg.Continued ...
Sports in Brief: Registration taking place for football, soccer
Registration has begun for YMCA Flag Football and YMCA Coed youth soccer. (Plus more)Continued ...
- Sports in Brief: TC's Johnson picked up by Twins