NEW YORK ( TheStreet) -- The blizzard that rammed most of the Northeast in January didn't snow-in retailers as much as expected.

Overall, same-store sales for the month rose 4.2%, better than the 2.7% Wall Street predicted, according to Thomson Reuters.

>>January Retail Sales: Live Blog

Heading into results, Wall Street was skeptical of seeing many upside surprises, and analysts all but dismissed the possibility of favorable earnings revisions. Nonetheless, of the 26 retailers tracked by TheStreet, 17 beat estimates. What was most surprising was the strength of some of these beats.

And a handful of retailers, including J.C. Penney ( JCP), Aeropostale ( ARO), Limited Brands ( LTD) and American Eagle Outfitters ( AEO), even upped their fourth-quarter forecasts.

Many retailers acknowledged that the West Coast, where the weather was generally dry, boosted monthly performance. Online sales were also stellar across the board, and strength at this channel is one reason why earnings guidance was lifted at many companies.

January also marked the last month the teen triumvirate -- American Eagle Outfitters ( AEO), Abercrombie & Fitch ( ANF)and Aeropostale ( ARO) -- will report monthly same-store sales figures. And David Bassuk, head of the Global Retail Practice at AlixPartners, foresees more retailers discontinuing reporting these numbers over the next two to three months.

January is typically considered one of the smallest sales months, and the least important month for the fourth quarter. But the growth in gift-card giving over the holidays has made this traditional belief less relevant, says Wall Street Strategies analyst, Brian Sozzi.

Despite strong results, UBS analyst Roxanne Meyer does not believe January was "needle-moving," as the sector faces significantly tougher comparisons in the first quarter.

"We believe retailers had the inventory to spare in January, with promotional levels higher versus last year. Stock repurchase activity may have also provided a small sector boost," Meyer wrote in a note. "We believe investors are staying on the sidelines for now given the tougher first-quarter comparisons and are awaiting clarity on 2011 earnings guidance and the impact of sourcing costs."

"I think January demonstrates there is underlying strength in consumer spending, confirming that November was no fluke," Sozzi wrote. "The spending power exists if there is a call to arms, such as Black Friday creep in November, or Mother Nature ugliness in January, which led to a 'stock up now' mentality. That said, let's not completely disregard December as I still think it was a wakeup call that consumers will make snap decisions in their budgets if they perceive economic conditions worsening."

Looking ahead, analyst expect a lull in traffic during February and March, as spring breaks are pushed into April due to a later Easter holiday. This shift in Easter could result in retailers becoming more promotional earlier in order to move through merchandise, predicts Nomura Equity Research analyst Paul Lejuez.

Click on for a look at January's biggest winners and surprises....


Aeropostale ( ARO) reported a surprise 1% uptick in January same-store sales, beating estimates of a 2.9% decline.

As a result, the teen retailer upped its fourth-quarter guidance, and is now foreseeing earnings in the range of 96 cents to 97 cents a share, from prior outlook of 94 cents to 96 cents. Lejuez says Aeropostale upping its outlook suggests margins were not a disaster or the company was able to offset any erosion elsewhere.

The company said that it made progress during the month selling through its holiday forecast, while also transitioning to new spring merchandise.

Analysts worried that its push to stock stores with spring merchandise would weight on results. Aeropostale has also struggled over the past several months to compete against Abercrombie & Fitch's aggressive promotions.

Stifel Nicolaus analyst Richard Jaffe said that he believes Aeropostale had to increase its promotional activity in January in order to clear through holiday merchandise to make room for its new spring assortment. Average unit retail decreased in the low double digits.

"Although the stock may look attractive ... we believe consensus will come down sharply," Lejuez wrote. "With higher product costs coming next year, they are in a difficult position as comparable sales have been weak and they do not have pricing power."

Aeropostale previously announced that it will no longer report monthly comparable sales starting in February.

The company has also become the target of takeover chatter following bids on Gymboree and J.Crew by private equity. "Investors have been thinking that Aeropostale's valuation and strong balance sheet could make it attractive to potential suitors as well," J.P. Morgan analyst, Brian Tunick, wrote in a note ahead of results.


Gap ( GPS) was one of the biggest shocks, posting a 1% gain in January same-store sales, compared with a 3.1% drop analysts expected.

The company raised its raised its full-year 2010 forecast to $1.85 to $1.86 a share from prior outlook of $1.77 to $1.82. This translates into fourth-quarter earnings of 57 cents to 58 cents a share. But Sozzi warns that this guidance revision was fueled by share repurchase activity.

By division, comparable sales at namesake stores were flat, declined 3% at Old Navy and rose 4% at Banana Republic.

Earlier in the week the company announced a major executive shakeup at its namesake brand, with President Marka Hansen stepping down. She was replace by Art Peck, who previously handled corporate strategy and oversaw the outlet division of Gap.

Aside from the shift in president, Gap announced nearly two dozen position changes, including the promotion of Pam Wallack to head of a new Global Creative Center. The new creative center will be based in New York, not at its headquarters in San Francisco.

Shares of the specialty retailer were jumping about 6% to $20.17 in morning trading.

"The stock is not expensive, but Gap brand must perform better in 2011 for the stock to work," Lejuez noted.

Costco Wholesale

Costco Wholesale ( COST) had the strongest month of the big-box retailers, reporting a 9% jump in same-store sales, easily topping Wall Street's forecast.

Excluding higher gasoline prices and foreign currencies, the company actually saw a 6% increase, still in-line with estimates of 6.1% gain.

"Continued strength in traffic suggests market share gains and bodes well for 2011," Janney Capital Markets analyst David Strasser, wrote in a note.

By category, consumables were strong in January, while hardlines came in at negative low single-digits. Strength in sporting goods, office products and gardening, were offset by softness in electronics. Softlines outperformed, with housewares, small appliances, apparel and jewelry, leading gains. Strasser expects this will help margins in the second quarter.

Shares of Costco were rallying 3.7% to $73.52 in morning trading.


Zumiez ( ZUMZ)reported a 15.3% spike in same-store sales, benefiting from teens flocking to the action sports retailer for winter gear.

"Zumiez actually had 'wear now', unique product in its stores for the snow frolicking teen," Wall Street Strategies analyst Brian Sozzi, wrote in a note. "This was counter to competitors in the mall, which had assortments that were prepared to deck teens out for spring break rather than 'Day After Tomorrow' weather conditions."

Most of Zumiez's uptick actually came in the first week of the month, when it registered a 27% surge in revenue at stores opened at least a year. By the end of the month, that increase fell to just 4%.

From December through February, the snow business as a whole represents about 20% of sales, estimates analyst Jennifer Black, of the firm bearing her name.

"Over the last couple of years Zumiez has adapted by investing in merchandising, marketing, selling and infrastructure," she wrote in a note. "In addition, the company has introduced new brands and price points and increased private-label offerings."

Zumiez has been outperforming rival Pacific Sunwear of California, and Black predicts PacSun will shutter a significant number of stores over the next several years, leaving Zumiez in prime position to capture more market share.

Limited Brands

Limited Brands ( LTD) was the biggest winner of the month, as comparable sales soared 24%. Analysts were forecasting a much smaller increase of 6.7%.

The month was driven by Victoria's Secret's semi-annual sale, which started one day later, pushing some sales out of December and into January. Victoria's Secret is rarely promotional, which creates pent-up demand, traditionally making its semi-annual sale a big sales week.

Limited lifted its fourth-quarter outlook to $1.23 to $1.25 a share, from a previous range of $1.02 to $1.17 a share. For February, it is expecting flat to slightly positive same-store sales.

While its February forecast would be a significant deceleration in recent trends, Lejuez notes that Limited's guidance has been conservative all year.

"The Limited story continues to be compelling, with consistent positive comparable sales results, less cotton/cost pressure than more in the apparel universe, and a growing international business," Lejuez wrote. "We think that the market still underestimates the EPS growth an attractive returns on capital that international expansion is likely to provide over the long term."

Shares of Limited are climbing 6.3% to $30.97.


Walgreen ( WAG) reported a 6.1% jump in same-store sales, beating Wall Street's forecast of 3.4%.

Pharmacy comparable sales rose 6.9%, while front-end sales, which include discretionary items like cosmetics, jumped 4.5%.

In comparison, rival Rite Aid ( RAD) reported last week, that January comparable sales grew 1.1%, marking its second consecutive month where it reported positive sales.

By division, pharmacy revenue inched up 0.6% while front-end sales increased 2.2%.

Up until December, comparable sales had fallen for 18 straight months.


TJX ( TJX) reported a 2% increase in comparable sales, better than Wall Street's forecast, leading the off-price retailer to revise its guidance.

Analysts were calling for a much smaller gain of 0.3% in January.

CEO Carol Meyrowitz said in a statement that she was pleased with the January results, particularly because the company has a high concentration of stores in the Northeast and Midwest, two regions that were pounded by bad snow storms.

TJX now foresees fourth-quarter earnings in the high-end of its expected range of 97 cents to $1.01 a share. For the full year, management foresees profit coming in a little higher than its forecast between $3.41 and $3.45 a share.

In December, TJX announced that it would shutter its A.J. Wright stores to focus on its core business.

"Given our belief that there has been a fundamental paradigm shift among customers to value priced merchandise, we believe TJX, with its value proposition of offering the right brands at great values, is well positioned to retain these customers once the economy improves," Jaffe wrote in a note.

Shares of TJX are rising 5% to $49.49 in morning activity.

Ross Stores

Ross Stores ( ROST) posted a 3% jump in same-store sales, higher than the 0.5% increase expected.

The off-pricer issued full-year guidance of $4.90 to $5.10 a share, in-line with Wall Street's estimates of $4.98. For the first quarter, Ross is looking for a profit of between $1.27 to $1.32 a share, also better then consensus estimates.

"The initial guidance is strong, especially considering management is typically very conservative," Lejuez wrote.

Lejuez prefers Ross Stores over rival TJX, saying it provided strong 2011 guidance and is expecting positive same-store sales despite tough comparisons. "Ross Stores is well positioned relative to the sourcing cost pressures most of the softline group will face in 2011 and will likely benefit from greater product availability."

Wet Seal

Wet Seal ( WTSLA) wowed the market, reporting an unexpected 6.2% gain in same-store sales. Wall Street was predicting a decline of 4%.

This marked the first time since March that both divisions of the company posted positive comparable sales, with namesake stores jumping 6.6% and Arden B up 3.7%.

"After a disappointing December, we are impressed that both brands were able to gain momentum this month despite poor weather and increased promotions in the mall," Lejuez wrote.

Looking ahead, Wet Seal now expects fourth-quarter earnings of between 4 cents and 5 cents a share. It previously predicted profit to come in at the low end of its prior range of 3 cents to 5 cents a share.

Wet Seal was gaining 4% to $3.59 in morning trading.

--Written by Jeanine Poggi in New York.

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