Low-income customers at Wal-Mart (NYSE: WMT - News) appear to be using Christmas gift cards to buy food and other basics rather than using them on discretionary gifts, the largest US retailer said on Thursday, in a telling sign of the economic pressures facing the least well-off US consumers.

Wal-Mart cited lower-than-expected redemptions of gift cards during January as a factor for moribund sales during the month. Sales at stores open at least a year increased by just 0.5 per cent, against its original forecast of 2 per cent growth.

The retailer, which also blamed bad weather in the Midwest for the weakfigures, said: "Customers appear to be holding gift cards longer and using them more often for food and consumables rather than discretionary purchases."

Wal-Mart has sought to capitalise on its reputation for low pricing in thecurrent gloomy economic environment, announcing a range of price cuts in late January that it marketed as its own "economic stimulus plan for US shoppers".

But the poor January performance raises doubts over predictions from some Wall Street analysts that its model will perform better than its rivals as consumers become more cost conscious.

Both Wal-Mart and Target (NYSE: TGT - News) , the rival discounter, reported that sales of food and healthcare items remained strong during the month. But Target reported a 1.1 per cent decline in comparable sales in January, with poor clothing sales again contributing to a slump that first hit the retailer in September.

Retail Metrics, which tracks the monthly sales figures, said its comparable sales index rose just 0.2 per cent in January.

There were a few exceptions to the generally bleak picture. JC Penney, the mid-range department store, said it did better than expected during the month, and issued a positive earnings forecast that drove its shares up 7 per cent, to $46.91 in early-afternoon trading.

But its rival Kohl's saw comparable sales fall 8.3 per cent as it cut prices to clear inventory, predicting earnings at the low end of its previous guidance.

Larry Montgomery, Kohl's chief executive, said that its "customers continue to be selective in their purchases, driven by value and need".

Macy's, the largest US department store chain, said on Wednesday that its comparable sales fell 7.1 per cent in January, leading it to cut its earnings forecast for the quarter. It also announced it was shedding 2,300 administrative jobs. Saks (NYSE: SKS - News) , the luxury department store, reported a 4 per cent increase in sales.

But it said even its largely prosperous customers "have continued to shift more of their spending to promotional events". Nordstrom (NYSE: JWN - News) , another high-end store, reported a 6.6 per cent fall in comparable sales, while Neiman Marcus, the luxury retailer, said its same store sales were up 3.3 per cent.