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US retailers rebound after January shopping spree

NEW YORK (AP) — Wealthier shoppers went on a buying binge in January and even middle-income Americans spent a little more, retailers said yesterday. Some chains reported their brightest monthly results in years.

The prospects for many stores' fourth-quarter profit also brightened further. Macy's, Gap Inc., Children's Place Retail Stores Inc. and others raised their outlooks Thursday, because they weren't stuck with mounds of holiday leftovers they needed to clear out.

The strong performances offered a nice finish to the industry's fiscal year, which typically ends in January, but the increases came partly because the same period last year was so dismal.

"It ties a nice bow around the fourth quarter," said Bryan Eshelman, managing director in the retail practice of AlixPartners, a global business advisory firm.

But Eshelman and other analysts worry that shoppers grappling with high joblessness and tight credit will now take a break, and the first quarter could be more gloomy for stores.

"The jobs are not there, the unemployment rate is high, and consumers are saving more of their income," Eshelman said. "My guess is that they'll be taking a breather."

Michael Niemira, chief economist at the International Council of Shopping Centers, said January's comparison of sales at stores open at least a year was encouraging. It shows consumers are "tiptoeing back, though they haven't dramatically changed their shopping patterns".

The figure is considered a key indicator of a retailer's health because it excludes the effects of stores that open or close during the year.

Even Abercrombie & Fitch, which had seen its teen customers defect to less expensive alternatives, reported its first increase since April 2008.

The ICSC's preliminary index for retail sales overall rose three percent, compared with a 4.6 percent drop a year ago. The increase builds on a 3.6 percent rise in December and is well above ICSC's forecast for a one percent gain.

Overall, mall-based clothing chains enjoyed a 6.4 percent gain for January, the best performance since March 2007, when it rose 7 percent. But this January's figures are a comparison against a month — January 2009 — when the index fell 14 percent for clothing stores.

The ICSC index and forecasts exclude Wal-Mart Stores Inc., the world's largest retailer, which stopped reporting its sales monthly last year.

Niemira expects the index to rise two percent for February, and he's sticking with his annual growth forecast of three percent to 3.5 percent. That would be the strongest showing since 2006, when the pace was 4.8 percent. The average monthly change in 2009 was a 1.9 percent drop.

Luxury chains such as Nordstrom Inc. and Saks Inc. had gained the most, zooming past Wall Street expectations.