Shoppers braved the harsh winter weather and hit the stores in February, sparking a broad-based rebound in retail sales after a tough January.
The Commerce Department reported Thursday that February's seasonally adjusted retail sales increased 0.3% from the prior month, bouncing back from a 0.6% decline in January when frigid cold sent consumers into hibernation.
Analysts expected a 0.2% gain in February, though January's drop was revised down from the 0.4% slide initially reported and December's dip was revised to 0.3% from 0.1%.
Auto sales climbed 0.3% last month, reversing a 0.3% drop in January. A measure of core sales that excludes autos, volatile gas-station receipts, and building supply sales also grew 0.3%.
Department stores saw 0.7% more business, and clothing retailers sold 0.4% more.
Sporting goods, books and music stores saw a 2.5% jump.
Nonstore sales, which include online retailers, climbed 1.2%.
The sales rebound was good news for retailers, which have seen spending chilled by the icy weather.
February same-store sales rose just 1.8% vs. a year earlier, according to Jharonne Martis, director of consumer research for Thomson Reuters. They were up just 0.3% when factoring out drugstore chains.
"The (Commerce Department) report was in line with our same-store sales data, suggesting that the retailers that saw gains saw them toward the last two weeks of the month of February as the weather improved and consumers received their tax refunds," Martis said, adding that much of the strength came from high-end consumers.
February is a transitional month in between the time retailers get rid of their winter merchandise and introduce their spring merchandise at full price, she points out.
It is also the first month of the first quarter for retailers, but they haven't been very upbeat about their prospects. So far, Martis has tallied 43 negative guidances for Q1 and only three positive outlooks.
That means it's important for retailers to move inventory that piled up during the winter storms, or else more discounting will be needed at the end of the quarter, potentially hurting profits, she warns.
While Thursday's sales report reflects a rebound from January's "weather-depressed pace," it would've been stronger had it not been for lingering weather problems that held back consumers, said Michael Niemira, chief economist for the International Council of Shopping Centers.
"But encouragingly," he added, "as March started, sales improved, suggesting that pent-up demand is likely to propel sales over the next couple of months.
National Retail Federation CEO Matthew Shay says the Commerce Department's numbers are encouraging, indicating the economy is primed for growth.
"While the weather continues to play tricks on economic forecasts and figures, we expect much-needed clarity come spring as consumers release pent-up demand," he said in a statement.
Still, he added, retailers continue to face "serious head winds" placed on them by policymakers, such as new overtime mandates and "political posturing on the minimum wage."