sales in january 'strong'.

In his discussion with analysts after the interim release last Friday, WOW CEO noted that sales in Jan and Feb had been "strong" and exceeded management's expectations. Today's ABS retail stats shows sales of clothing and esp food have grown pretty smartly in January. From memory Woolworths still sell food... so should help SP.

from SMH Businessday.
"Food, dept stores give retail data a boost Jason Cadden
March 1, 2011 - 2:24PM.
AAP

January retail trade figures were better than expected, helped by a rise in food sales and a recovery in department store sales, economists say.

Retail spending increased 0.4 per cent in January, official figures show.

Retail trade rose in the month to a seasonally adjusted $20.441 billion, compared to an upwardly revised $20.365 billion in December, the Australian Bureau of Statistics (ABS) said on Tuesday.

Advertisement: Story continues below Economists' forecasts had centred on a 0.3 per cent rise the month.

Commonwealth Bank economist James McIntyre said the outcome was stronger that expected.

"We did see some strong outcomes in the sectors that have been particularly weak over the last few months," he said.

"Food rose 2.5 per cent in the month of January. That followed two surprise falls.

"In particular, the RBA (Reserve Bank of Australia) has been surprised for a number of months in inflation outcomes coming out of the food sector.

"There has been this intense competition between the major supermarkets, which has been muting some of the price pressures that have been coming through at a wholesale level."

Mr McIntyre said the other strong outcome was a 2.3 per cent rise in the department stores, which had been weak recently.

"The department store sales compared over the year were still quite weak but that January outcome is at least quite positive, he said.

He expects retail sales to improve later in 2011 as the Australian dollar depreciates.

"Consumer spending has been strong in the economy. It just hasn't been strong at the retail level," he said.

"Our outlook is for the Australian dollar to peak relatively soon and begin to fall away as the US economic picks up steam and financial markets become a bit more confident in that US story.

"That will see the Australian dollar fall and some of those imported consumer items rise in price and that should mean we begin to see those trends in the retail sector start to reverse."

JP Morgan economist Helen Kevans said the retail sales numbers showed a modest pick up in growth.

"Rising food prices pushed up the food component, which accounts for 40 per cent of retail sales, but discretionary spending remained weak," she said.

"Indeed, ex-food sales fell 1.0 per cent over the month and our estimate of discretionary spending, which excludes sales of food, clothing, and other retailing, slumped 1.8 per cent, having risen over the last two months."

Ms Kevans said the January fall in discretionary spending was the largest in two years.

"In the current environment, it is not surprising that consumers have reined in spending on discretionary items, and real consumer spending likely will remain subdued in early 2011."

She still expects the RBA to raise the cash rate in May.

"With the economy running with little spare capacity, the terms of trade booming and private investment surging, underlying inflation pressures will continue to build, fundamentals which reaffirm our view that the tightening cycle will soon resume, with the next rate hike likely in May," Ms Kevans said.

Nomura Australia chief economist Stephen Roberts said the retail data was slightly better than the market forecast.

"That's a reasonably firm piece of data," he said.

He did not expect Tuesday's data to change the RBA's outlook on the state of the domestic economy