Gas, Snow and a Super Bowl Shuffle Moved January Retail Sales

Consumers are spending again, but they're leaving more of their shopping dollars at the gas pump, according to the monthly retail sales tally from the U.S. Commerce Department.Shoppers spent $355.8 billion at retailers in January, up 4.7% from a year ago. But gas stations took a big chunk of that increase; their sales were up 29% during the month, more than any retailer.

Rising gas prices have been pushing up sales totals for a number of retailers, but are also a concern, since they cut into households' discretionary income and their potential to shop for other items. Since U.S. household income remains stagnant, a run-up in gas prices could put the brakes on retail's recovery.

Factoring out auto sales, retailers raked in $295.5 billion in January, up 4.6% from a year ago. The Commerce Department numbers give a full picture of shoppers' spending, since they include gas, grocery and auto sales, as well as the results of the nation's largest retailer, Wal-Mart Stores Inc. (WMT), which does not publicly report its monthly numbers.

Auto dealers' sales rose 6.7% and didn't seem hit as badly as expected by the recall of millions of Toyota Motor Corp. (TM) cars. But those recalls only hit late in January, and were expanded in February, so the market has not yet seen their full effects.

Cars, gas and online shopping were the bright spots in the month, along with sporting goods and hobby stores, which saw sales rise 5%, thanks to more households looking to amuse themselves at home on the cheap. E-tailers were up 12.4% and have been on an upswing all along, thanks to consumers comparison-shopping online and a stretch of bad weather this winter, which has kept many shoppers indoors.

A tally from the National Retail Federation found that after factoring out cars, gas and restaurants -- sales at eateries and bars have held up throughout the recession -- store sales were relatively flat in January, down 0.2% from 2009, but were up 0.5% over December's figures.

"We continue to see the economy show subtle signs of improvement," said NRF Chief Economist Rosalind Wells. "While the recovery still has a long way to go, we remain encouraged by the latest retail sales figures."

Delay of Game: January Penalized by Shifted Super Bowl

The usual suspects were down again in January: Hardware (down 6.3% from January 2009), electronics (down 7%) and furniture and home furnishings stores (down 4.4%). Hardware and home furnishings stores continue to feel the effects of the housing bust, while electronics is still experiencing falling prices on big-ticket items such as flat-screen TVs.

Tthe January electronics also got hit by the NFL's decision to move the Super Bowl back one week, which shifted the associated food and electronics sales to February. Warehouse clubs Costco Wholesale Corp. (COST) and BJ's Wholesale Club (BJ) and discounter Target Corp. (TGT) all reported their January sales were affected by the shift, and they hoped to get a bump in February sales.

Some segments that had begun to show signs of sales recovery during the holiday took a step back. Apparel stores were down 1.7% in January, and department stores dropped 0.8%. But this isn't necessarily bad news for their profits: The stores faced the post-holiday clearances with much lighter inventories than a year ago, meaning less discounting.

Most retailers recently had reported unexpectedly strong January sales, which led several companies to boost their guidance for their full-year 2009 earnings numbers; the period during which those numbers will be released starts in earnest next week.

A Trend of Modest Improvement

The Commerce Department numbers -- which were delayed a day by the massive East Coast storms -- were not unexpected. The monthly SpendingPulse tally from MasterCard Advisors, released earlier in the week, also found an unexpectedly strong sales sales rebound of 3.6% in January over the year before.

But after parsing the numbers further, Kamalesh Rao, SpendingPulse's director of economic research, warned that once gas and auto sales sales were factored out, sales only grew 0.3%. Without the upswing in gas prices, "the recovery of retail sales over the past several months looks a lot more tentative," said Rao in his report. Still, there's a trend of modest improvement for three months in a row, he added.

Investors are looking closely at retail stocks that have gained ground in recent months. Zacks Investment Research recently spotlighted the retail sector recovery, but warned it's an uneven progress, with the more promising stocks at opposite ends of the income range. It flagged Signet Jewelers Ltd. (SIG) and Tiffany & Co. (TIF) at the high end and Big Lots (BIG), Sears Holdings (SHLD) and Tuesday Morning (TUES) among discounters.
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