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Retail sales grew slightly in January, according to a Commerce Department report released this week. Sales -- excluding gasoline, building materials, and cars -- were up 0.1%, which makes January the third straight month in which sales have risen. That's good news for the economy, even though the increase was smaller than in the previous two months. What's even better news for investors is that many businesses easily exceeded the average increase to give themselves a strong start to 2013. Here are three of last month's winners.
Once again, Limited Brands (NYSE: LB ) knocked out an excellent month, with comparable sales up 9% across its combined brands. That pulled comparable sales in the fourth quarter up to 5% and the year to date to 6%. While this isn't new ground for the company -- comparable sales were up through all of 2012 -- it is the biggest gain since July last year, when the sales grew 12%.
The bigger news was that Limited's La Senza lingerie brand finally got the boost it's been looking for. Comparable sales were up 15%, which helped the brand finish flat for the quarter. The push at La Senza has been long and slow, but hopefully this is the sign investors have been looking for. Over the past year, Limited has closed 72 La Senza stores, which represents about one-third of total stores from the start of 2012. Those cuts have trimmed the sizable fat, and helped the brand get its act together.
While the La Senza story is excellent, the company is still struggling online. Victoria's Secret online sales fell in January after posting flat sales in December. That pulled the quarterly comp total down into negative territory, and makes me worry about overall brand strength, just a little. If online can get itself sorted out over the spring, then I'll be much happier. Even if it can't, Limited is still looking like a winner at a P/E of 19, in line with the industry average.
The biggest increase of these three, and the most surprising for me, came from Macy's (NYSE: M ) , last month. The department store kicked out a whopping 12% increase in comparable sales, with total revenue climbing 35%. The increase was driven by changes to the post-holiday strategy along with ongoing changes to the company's in-store experience. Recently, Macy's has been focusing on local marketing campaigns and store renovations to help distinguish its locations from the pack.
Unlike Limited Brands, Macy's has been raking it in online, too. The company's omnichannel plan -- combining online and in-store to unify its customer experience -- has resonated with customers. In January, online sales grew 49%. That's helped bump up the comparable-store sales growth by 2 percentage points over the last year, as Macy's includes online sales in its calculations. With a low P/E and a solid plan for 2013 in place, Macy's looks like it's set up well for the rest of the year.
The last January winner to look at is Gap (NYSE: GPS ) . The definitive American middle-class apparel company increased comparable sales by 8% in January, with all of its brands showing an increase. The biggest gain came from the Old Navy brand, which grew comparable sales by 12%. That was also the biggest turnaround brand from a year ago, when sales declined 6%. The swing in sales can be attributed to the work that Gap did over 2012 to refine the branding of Old Navy, and distinguish it from Gap.
The weakest performance came from the company's international division, which had a comparable sales increase of only 1%. This area is going to be the one to watch in 2013, in my opinion. Late last year, the company reorganized its management team so that international brands were pulled under the management of the brand CEOs. That means that Banana Republic's U.S. division is now managed by the same person who manages the European division. Hopefully, that will result in an international turnaround like the one seen in the U.S.
Gap is my pick of the bunch, in part because of the interesting brand work that the company is doing. It recently acquired high-end retailer Intermix, and its Athleta brand is building a name for itself as a strong competitor to lululemon athletica. I'll be watching Gap closely over the coming months to see just how much the company can do with those brands, and with its international operation.
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