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Retailers' February sales gains are best since late 2007

NEW YORK — Shoppers shrugged off the snow and worries about the economy in February to buy full-price spring clothing and other items at the nation's malls, resulting in the strongest retail sales gain since November 2007, a month before the recession started.

The upbeat news also helped soothe fears among some economists that weak consumer spending might make the economic recovery short-lived.

A broad array of merchants, from luxury retailer Nordstrom to mid-level Macy's to discounter Target, reported sales increases on Thursday that beat Wall Street analysts' estimates.

The overall 3.7 percent gain in February, according to the International Council of Shopping Centers' index of 31 merchants, came in the face of a decline in consumer confidence, high joblessness and tight credit, and marked the third consecutive monthly sales increase for retailers, according to the ICSC.

"I am surprised by the broader strength" in the figures, said Mike Niemira, chief economist at the ICSC, who had expected a 2 percent increase. "Everyone is participating in this gain. And that's a good sign for the retail sector and for the economy overall."

Thursday's figures show that while consumers were willing to buy clothing, their focus was still on necessities.

When the Great Recession began, shoppers had flocked to cheaper stores from their higher-priced rivals, but Thursday's figures offer clear evidence that consumers, albeit still thrifty, are crawling back to their old higher-price haunts for certain items.

Still, while consumers are starting to spend a little more, the figures were boosted partly because sales in February 2009 were so awful.

Analysts still believe it won't be a smooth path to recovery, for retailers or the broader economy.

"The consumer spending recovery is going to be slow, long and gradual," said Ken Perkins, president of research firm RetailMetrics.

Dennis Jacobe, chief economist at Gallup, believes shoppers' thriftiness may have thawed a bit, as those who have jobs are buying a little more. But, he said, frugality has not gone away, based on Gallup's polls.

"We are in a new normal of spending," he said. He cited Gallup surveys taken from Feb. 1 to Feb. 3 in which 57 percent of consumers polled said they are spending less. One-third of those surveyed said curtailed spending will be their normal pattern.

Unemployment, 9.7 percent in January, is expected to increase to 9.8 percent in February. The Labor Department is to report job figures today.

Other economic news

A summary of other U.S. economic reports released Thursday:

Pending home sales: Fewer Americans than expected signed contracts to buy previously owned homes in January, indicating the extension of a tax credit is doing little to attract buyers. The index of purchase agreements, or pending home sales, dropped 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced in Washington.

PRODUCTIVITY: Productivity in the final three months of 2009 surged at a faster pace than previously thought, as labor costs fell more rapidly. The Labor Department reported on Thursday that productivity jumped at an annual rate of 6.9 percent in the fourth quarter, even better than an initial estimate of a 6.2 percent growth rate.

FACTORY ORDERS: Orders to U.S. factories posted their biggest increase in four months in January, led by a surge in demand for commercial aircraft. The increase was another sign that manufacturing is helping to support the economic recovery. The Commerce Department said Thursday that factory orders rose 1.7 percent in January, slightly below the 1.8 percent gain economists had expected.

JOBLESS CLAIMS: New claims for jobless benefits fell last week in a sign that layoffs may be easing. The Labor Department said Thursday that initial claims for unemployment insurance fell by 29,000 to a seasonally adjusted 469,000. That nearly matched Wall Street analysts' estimates of 470,000.

Retail rundown

The percentage change in sales in February, compared with February 2009, for selected chains in four key sectors:

Drugstores

Walgreen: +0.4

Rite Aid: -3.2

Low-price stores

Costco: +9

BJ's Wholesale Club: +7.5

Target: +2.4

Clothing stores

Ross Stores: +11

Limited Brands: +10

TJX Cos.: +10

Abercrombie & Fitch: +5

Gap: +3

Stein Mart: -9.3

Department stores

Nordstrom: +10.3

Neiman Marcus: +5.1

Kohl's: +3.7

Macy's: +3.7

Dillard's: +2

Saks: +2

J.C. Penney: +1.2

Retailers' February sales gains are best since late 2007 03/04/10 [Last modified: Thursday, March 4, 2010 8:09pm]
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