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HomeMarketDepartment Store Sales Surged in January. Why it Shocked Analysts.

Department Store Sales Surged in January. Why it Shocked Analysts.

Since the pandemic, consumers are spreading their holiday shopping over more months.

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Craig Barritt/Getty Images for Nordstrom

Department store sales surged in January after months of decline, sending analysts back to their charts to figure out what happened.

Claire Tassin, retail & e-commerce analyst at decision intelligence company Morning Consult, “literally gasped out loud” when she saw that sales jumped by 3% last month, up from a 1.1% decline in December and above estimates for 1.7%.

But while the headline figure was surprising, the most unexpected turn of events in Wednesday’s report was that department store sales surged by 17.5% month over month and 5.4% from last January.

What makes the surge so stark is that it follows three months of consecutive declines for department store sales, and rising pessimism among analysts for the sector. The bump even goes against commentary from department stores themselves. In late January,
) warned of softer holiday sales, while
) previously said sales would come in at the low to middle end of the range it had forecast as a result of unexpected lulls in demand outside of the peak shopping weekends.

The apparent reversal of sales trends for department stores have left investors befuddled, with markets unsure what to think.

“Anyone care to chime in on why [department sales are up] because I don’t know,” wrote Peter Boockvar, chief investment officer at Bleakly Financial Group and author of The Boock Report.

Shares of
) rose up 1.7% and 2%, on Wednesday, respectively, while
inched up 0.5% and
) was unchanged.

It is worth noting that the Census Bureau, the agency that oversees retail sales reporting, classifies department stores as those with a range of products, from apparel, furniture, and appliances to toiletries, cosmetics, jewelry, and toys. Importantly, stores that sell all that as well as grocery items—think
) and
)–are lumped under a different category.

For Morning Consult’s Tassin, there’s a “confluence of factors” that drove up department store sales.

One of the main reasons is the way the data is adjusted for seasonal spending patterns. As Barron’s reported previously, seasonal adjustments are largely based on pre-Covid spending patterns, and consumers are now spreading out their holiday shopping. Since 2021, department stores’ January seasonally sales have trumped their performance from December. For instance, sales fell by 6.6% in December 2020, but rebounded by 19% in January 2021. December 2021 sales dropped by nearly 9%, but rose 11% the following month.

Another factor fueling the rise could be that a pocket of consumers held back on spending last December, Tassin said, opting instead to wait for more discounts in the new year. It is likely that they encountered them—Barclays analyst Adrienne Yih notes that Nordstrom’s promotions increased throughout the last quarter of the fiscal year, which extends into the end of January.

The weather also helped, said Eugenio Aleman, chief economist at Raymond James. A relatively warm January could have encouraged shoppers to be out and about, driving traffic back to stores. And indeed, traffic to both indoor and outdoor malls ticked up in January, rising by 4.1% and 5.3% year-over-year, respectively, according to data from Because department stores have long been mall staples, it’s likely that they were on the receiving end of some of the uptick in visitors.

Inflation may have had a hand as well. With prices on the rise, consumers were more budget-savvy this year, Tassin said, and looking for ways to control how much they spent on presents. Gift cards are a great way to do that, she said, which made them an attractive present for many shoppers. Gift card sales don’t get registered until the person uses the card, which can carry over into January and contribute to the higher sales figure. And while department stores aren’t the only companies to issue gift cards, their cards are a popular gift because they offer a wider variety of merchandise options than other specialty retail shops, Tassin added.

Still, analysts caution that January’s surge is more likely to be a one-time thing rather than a long-term trend in shopping behavior that heavily favors department stores.

“January is the second smallest month of the year, and smallest on a per day basis, so we won’t read too much into this month’s data,” wrote D.A. Davidson analyst Michael Baker in a research note on Wednesday.

A better gauge into how major department stores are doing will be their quarterly earnings report, which are slated to be released later this month and in early March.

Write to Sabrina Escobar at


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