January sales at top U.S. retailers moved into positive territory from last year's decline as many chains avoided drastic clearance sales and shoppers redeemed holiday gift cards.

Many retailers reported sales that beat Wall Street estimates, and Macy's Inc's and American Eagle Outfitters Inc raised earnings forecasts. Bon-Ton Stores Inc said its quarterly earnings would be at or near the high end of its outlook.

But Target Corp , the No. 2 U.S. discount retailer, posted disappointing sales and said it was prepared for a challenging environment in 2010.

Shares of Macy's rose 5.1 percent in premarket trading, and American Eagle was up 1.3 percent, while Target fell 2.7 percent.

Analysts on average had expected sales at stores open at least one year to rise 2.5 percent for the month, according to Thomson Reuters data, rebounding from a 5.7 percent drop in January 2009.

According to a preliminary tally of 21 retailers tracked by Thomson Reuters, 13 retailers beat estimates, while six came in below forecast. An additional nine chains were due to report.

The figures could mark the fifth consecutive monthly sales increase after a year's worth of declines during the recession, as consumers slowly return to spending and retailers lower prices to match a more circumspect shopper.

December same-store sales rose a stronger-than-expected 2.9 percent, helped by a late holiday shopping surge.

January is seen as the least important month of the holiday fourth quarter, accounting for the smallest portion of its sales. But with retailers avoiding the drastic clearance sales that hurt January sales a year ago and consumers cashing in on gift cards received in December, analysts expected some companies to raise their earnings forecasts.

SIGNAL FOR THE QUARTER

Retailers' comments about sales trends -- especially whether traffic weakened significantly at the end of January -- may signal how consumers will spend this quarter.

Some analysts worry that stronger-than-expected holiday sales pulled spending forward so that retailers could have a hard time luring shoppers in the first quarter, especially if cold weather crimps demand for spring merchandise.

Macy's Chief Executive Officer Terry Lundgren, speaking on cable business channel CNBC, said he was not expecting employment growth for 2010, but he saw an improved environment in January.

Macy's January same-store sales rose 3.4 percent, beating estimates for a flat month. The company said it benefited from its strategy to tailor merchandise locally at its namesake stores and strong performance at the upscale Bloomingdale's chain.

Macy's now expects to earn $1.35 to $1.37 per share, excluding restructuring-related costs, in the fourth quarter, up from its prior view of $1.14 to $1.18. Analysts were expecting $1.18.

Costco Wholesale Corp said same-store sales rose 8 percent in January, better than the 7.8 percent increase expected by analysts, according to Thomson Reuters. The wholesale club benefited from a 25 percent jump at its international divisions.

Same-store sales at Limited Brands rose 6 percent, topping a Wall Street view for a 0.5 percent increase.

But apparel retailers Hot Topic posted a decline that was worse than forecast.

At Hot Topic, January same-store sales fell 13.1 percent, missing Wall Street estimates for the third straight month. The teen clothing retailer also said it expected fourth-quarter earnings to be at the low end of its previous outlook of 18 cents to 20 cents a share.

Sales at Hot Topic, which sells rock 'n' roll-inspired clothing as well as music and accessories, have weakened in the absence of new must-have products like its hugely popular Twilight merchandise.

By category, analysts expected the worst performance to be from teen and children's apparel retailers, with sales forecast to decline 0.8 percent. That would represent its 19th consecutive drop, according to Thomson Reuters data.

(Reporting by Nicole Maestri in San Francisco, Michele Gershberg, Martinne Geller, Phil Wahba and Dhanya Skariachan in New York, Jessica Wohl in Chicago; Editing by Lisa Von Ahn)

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