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Overall, January comps showed reluctance by shoppers to succumb to the lure of discounts and gift cards. Hardest hit were the moderate department stores, which worked hard in January to drive shoppers into stores.
But raised earnings guidance from J.C. Penney Co. Inc. and Gap Inc. lifted the mood of investors, who buoyed the retail sector Thursday.
As a result, the WWD Composite Stock Index grew 2.7 percent to 884.51, while the S&P Retail Index soared 3.7 percent to 403.52. The Dow Jones Industrial Average gained 0.4 percent to close at 12,247, while the broader S&P 500, increased 0.8 percent to 1,336.91.
At the bell, J.C. Penney rose 8.5 percent to $47.44, while Gap gained 7.2 percent to $19.65. Other stock gainers included Talbots Inc., up 13 percent to $9.25, while Macy's Inc. leapt 5 percent to $25.11.
The good news, according to analysts, was that many retailers had improved inventory positions, which means gross margin rates should maintain some strength. The market is also looking forward to spring, which promises stronger fashion trends.
Until then, a look at January's results shows an overall improvement over December. Of the retailers tracked by WWD, the mass channel had an average gain of 2.2 percent, up from December's 1.1 gain. The specialty channel delivered an average decline of 1.2 percent, an improvement from December's 3 percent fall. The department stores shed 3.6 percent, an improvement over December's 5.4 percent drop.
Looking at total net sales for the month, specialty stores gained 2.5 percent while mass merchants rose 1.5 percent. But department stores fell a staggering 21 percent, supporting the notion that there's been a pull back on spending from the aspirational segment of the market.
"Consumers are starting to face the reality that it might be time to stop spending," said Patricia Walker, partner in the consulting firm Accenture.
Craig Johnson, president of Customer Growth Partners, countered that things are not as bad as it seems. Johnson said it is important to note that comp sales do not include online sales, "which means that you're missing 7-plus percent of the retail economy." Johnson said retailers such as Apple Inc. and Amazon.com have delivered annual growth rates of 45 and 42 percent, respectively — indicating the strength of online sales.