• by Sarah Mahoney  @mahoney_sarah, February 5, 2009

Alas, January sales results at the country's largest stores turned out to be as ugly as expected. But industry observers say the January sales declines held relatively steady--a sign that consumers are settling in to their new spending patterns.

One bright sign is that Wal-Mart Stores did well, beating its own forecasts. At its Walmart unit, comparable-store sales gained 2.1%, and at its Sam's Club, sales gained 2.8%. (Both figures exclude the impact of gasoline sales.) The Bentonville, Ark.-based company says sales were especially strong in grocery, health and wellness, and the company "either met or exceeded forecasts in home, entertainment and hard lines."

But overall, results were down. TNS Retail Forward, a Columbus, Ohio-based consultancy that tracks about 40 large retailers, says January same-store sales declined 1.4%--a tad better than 1.5% decline reported for December.

"Shoppers are saying that while things aren't great, they don't necessarily believe they're going to get worse," says Frank Badillo, senior economist at Retail Forward. "Initially, when all the bad news about the economy mounted, we saw households cut back. But after those initial cutbacks, they're in a wait-and-see mode, and seem to be sustaining that lower rate of spending, which explains the decline from last year at this time. But they are spending when they need to--they're buying food and shoes, developing new store preferences and even new brand preferences."

Still, the declines were breathtaking in some categories. Higher-end teen retailers continued to have a rough time of it, with same-store sales dropping 22% at American Eagle Outfitters, 20% at Abercrombie & Fitch, 14.7% at Wet Seal, and 11% at Pacific Sunwear. Buckle continued its hot streak, however, with sales gaining 14.7%, Aeropostale gaining 11%, and Hot Topic up 6%.

Specialty apparel posted more declines, with sales falling 23% at Gap Inc., 10.9% at Chico's, and 9% at both Limited Brands, which owns Victoria's Secret, and TJX, which owns TJMaxx.

Department stores also did poorly, with sales falling 16.4% at JC Penney and 13.4% at Kohl's. Macy's fared relatively well, with sales slipping just 4.5%--slightly better than forecast. Declines were steeper in the luxury segment, with Neiman Marcus posting a drop of 24.4%, Saks 23.7% and Nordstrom 11.4%.

Still, the industry is worried, and executives from the National Retail Federation told the U.S. Senate that the economic stimulus legislation under consideration "fails to do enough for consumers," and again asked for a series of national sales tax holidays intended to jumpstart spending.

But Badillo is slightly encouraged, and says the firm's ongoing ShopperScape research finds that the share of shoppers who plan to spend more in the coming month climbed by three percentage points in January, its first increase since September.