When Wal-Mart Stores reported today that January sales were weaker than expected, the mega-retailer blamed gift cards and the weather for the shortfall.

Gift cards?

Retailers have traditionally loved gift cards because they have been considered a surefire way to commit shoppers to walking through store doors. The Wal-Mart announcement is worrisome, however, because of what it reveals about the state of consumer spending. The retailer said redemptions of its gift cards were below expectations—indicating that people are not going shopping even when they have money in hand in the form of gift cards. And Wal-Mart reported that when gift cards were being used, it was more often to buy food and necessities, and not for discretionary purchases.

The idea that people not using gift cards can hurt sales may seem confusing at first. After all, the money has already been shelled out for the card, so what's the rush?

But retailers don't get to book the cash spent on gift cards as revenue until the card is redeemed. At the time the card is bought, the revenue from that transaction gets recorded on the balance sheet as a liability.  

Scott Krugman, a spokesman for the National Retail Federation, explains that states' unclaimed property laws require businesses to turn over revenue from gift cards if they are not redeemed within a certain number of years. (The number varies from state to state.)

In other words, until it is redeemed, that $50 Macy's gift card you bought your mother is nothing more than an interest-free loan for the retailer.

Sales of gift cards have been growing, rising 17 percent last year, to $97 billion,  says research firm TowerGroup. A significant portion of purchased gift cards go unused every year—$7.8 million last year, down from $8 billion in 2006. Still, that's no small amount of potential revenue lingering in purgatory.

"Anecdotally, it seems that gift card redemptions are down so far for the year," says Krugman, who notes that the NRF does not officially track those redemptions. "They could be down for a variety of reasons: people might not like the merchandise, or they might not have their minds on shopping."

The second half of the gift card dilemma for retailers has to do with what people are using them for. Gift cards used to mean that high-margin discretionary items like apparel and seasonal items would be bought; indulgences that, especially in tight times, people wouldn't buy if they didn't consider them as essentially being freebies. But increasingly, cards are being bought and redeemed at places such as grocery stores and coffee shops rather than clothing and department stores.

"What we heard over the holiday season is gas-station gift cards are becoming more popular," says Krugman.

And if those cards are holiday gifts that are now being used for basics, what does that portend for the spring?

According to American Express spokesperson Robert Sherman, AmEx saw the sales of gift cards in 2006 exceed the total sales for all previous years since the cards were launched in 2002.

That's not necessarily good news for retailers, as AmEx gift cards can just as easily be used for gas and cell-phone bills as handbags and DVD players.