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Retailers report modest gains for January

NEW YORK — Many retailers reported modest sales gains for January, as limited racks of holiday clearance items failed to entice shoppers to spend more freely.

Fourth-quarter profit profits look brighter, however, as Macy's and Bon-Ton Stores are raising their outlooks because they didn't have to discount heavily and saw sales improve.

"Retailers are breathing another sign of relief," said Ken Perkins, president of RetailMetrics, a research firm. "There are more winners than losers." But he emphasized that shoppers were still tight with their purse springs.

"The vast majority are still very focused on value and stretching every dollar. And that's not going to change for most of the year. I don't see a catalyst for spending until the back-to-school season."

As merchants reported their sales figures Thursday, several stores including Limited Brands and Macy's announced solid sales increases. But Stage Stores Inc. and teen retailer Wet Seal suffered declines. Excluding gasoline, Costco Wholesale Corp. had a small gain.

The figures are based on sales at stores open at least a year, considered a key indicator of a retailer's health because it excludes the effects of new stores.

January is the least important month of the year on retailers' calendar as stores use the month to clear out winter merchandise and bring in spring merchandise.

So analysts say they'll be studying sales patterns more closely in the coming months to discern shoppers' financial health.

January did offer clues about shoppers' focus on fat discounts. For the holiday season, stores ordered so conservatively that they ended December with relatively little extra inventory — and less than usual to mark down in January. As a result, some stores pushed up deliveries of spring items from jumpsuits to sandals, but bargains were all that most consumers wanted.

The latest report on confidence from The Conference Board shows that consumers' mood is steadily improving as they latch on to more signs of recovery in the economy. But until the job market improves dramatically, many shoppers are likely to remain frugal. Economists surveyed by Thomson Reuters estimate that employers added 5,000 jobs in January, following a loss of 85,000 in December.

But government figures coming Friday are expected to show the unemployment rate ticked back up to 10.1 percent in January from December's 10 percent.

Against this economic backdrop, warehouse clubs such as Costco and other discounters are expected to keep attracting shoppers.

Costco said Thursday that its sales at stores open at least a year climbed 8 percent in January, propelled by higher gasoline prices and a softer dollar. The warehouse club operator's performance topped the 7.8 percent increase that analysts polled by Thomson Reuters expected.

But excluding the impact of higher gasoline prices and the weaker dollar, Costco's key sales figure rose 2 percent for the month with sales at U.S. stores open at least a year flat. Analysts had expected a 5.5 percent gain.

Macy's reported a 3.4 percent gain, beating analysts' estimates for flat sales. Victoria's Secret parent company Limited Brands Inc. enjoyed a 6 percent sales gain, beating analysts' projections for a much smaller increase of 0.5 percent.

But Stage Stores, citing lower clearance inventory and bad weather, had an 11.3 percent sale drop, while Wet Seal saw a 3.7 percent decline.