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Shopping spree signals better economic times

Bigger tax refunds, an improving economy and new fashions were cited for encouraging sales at retail stores.

NEW YORK - Despite a spike in oil prices and stormy weather in the Northeast and Midwest, consumers extended their shopping spree into February, handing retailers better-than-expected sales for the month.

As merchants reported their results Thursday, it was clear that factors including new spring fashions and bigger tax refunds helped boost spending, but analysts also pointed to a generally improving economy, particularly the job market, that has helped reinvigorate business since the beginning of the year.

Especially encouraging were reviving sales at mid- and lower-priced department stores, such as Kohl's Corp. and Sears, Roebuck and Co., which had struggled as customers worried about job security cut back their spending.

A broad range of companies beat Wall Street sales forecasts, including Wal-Mart Stores Inc., Target Corp., J.C. Penney Co. Inc., Nordstrom Inc., Talbots Inc. and teen retailers such as Abercrombie & Fitch Inc.

Among the few disappointments were Limited Brands Inc. and May Department Stores Co., which announced Monday it was being acquired by Federated Department Stores Inc.

"The final February tally is very robust," said Ken Perkins, retail analyst at RetailMetrics LLC, a research firm in Swampscott, Mass. "The strength was across all retail categories. The economy appears stronger than initially expected. And consumers are responding to spring fashions, despite the cold weather snap."

Consumers' tax refunds, which on average are larger than a year ago, are giving consumers an added incentive to spend. Stores, particularly discounters, benefited from the timing of the Super Bowl, which was played in February this year instead of January.

The International Council of Shopping Centers-UBS preliminary sales tally of 69 stores rose 4.9 percent, much better than the 3.3 percent increase it had projected. The tally is based on same-store sales, which are sales at stores opened at least a year, considered the best indicator of a retailer's health.

February's results were the strongest gain since May 2004, when the tally recorded a 5.4 percent increase, and came on top of a 6.7 percent gain in the year-ago period. In January, the nation's retailers reported a solid 3.6 percent increase.

While figures are not available for Florida, the state's retailers are upbeat about consumer spending in the first quarter. The Florida Retail Index, a quarterly industry outlook compiled by the University of Florida, rose 5.1 points to 61.5. Based on interviews with 150 retail company executives, the survey found 60 percent said their sales were running ahead of last year's pace and 17 percent expected to add staff.

"That's a good sign for the rest of the Florida economy," said Rick McAllister, chief executive of the Florida Retail Federation.

Nearly half (46 percent) said a voter-approved $1 increase in the state's minimum wage will affect their costs. One third expect to increase prices as a result, while about 20 percent expect to shrink payroll. Almost as many retail decision-makers (42 percent) were concerned about the federal deficit or U.S. health care policy (40 percent) slowing the state's economy.

Times staff writer Mark Albright contributed to this report.

[Last modified March 4, 2005, 00:30:22]