U.S. retail sales grow modestly

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

Fourth-quarter 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 strings.

"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.

Shoppers focus on discounts

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 per cent in January from December's 10 per cent.

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