February retail sales recovered a bit from their January deep freeze despite continued frigid weather and relentless snowstorms in the first half of the month in much of the country. Sales at sporting goods and building supply stores, auto dealers and restaurants increased, but clothing stores had a relatively slow month, with the weather not yet nice enough to stimulate sales of spring clothing and winter styles pretty much out of stock. Once better weather arrives, apparel sales are expected to pick up due to pent-up demand and some improvement in the economy.
Total retail sales grew by only 1.1% on a 12-month smoothed basis, according to the data released by the U.S. Department of Commerce, slightly ahead of January’s 0.9% rise but the second lowest monthly increase in over eighteen months.
Total retail inventory rose by 7.9% in January, the most recent month for which inventory data are available, slightly below January’s 8.2% increase, indication that many retailers were able to clear out excess inventories as the fiscal year drew to a close. Although rising retail inventories have been a concern for many industry watchers, providing support for the claim that much of the sales surge in the fourth quarter of 2013 was due to intensified promotions, it looks as though many companies in the industry are beginning the new quarter and year with clean balance sheets.
The department, chain and discount store sector, which includes Macy’s, Sears, J.C. Penney, Walmart and many others, suffered its twenty-third straight month of declining sales. Seasonally adjusted revenues fell by 5% on a 12-month smoothed basis, slightly better than January’s 7% plunge. Big store inventory rose by 2.3% in January, causing the inventory-to-sales ratio to increase from 2.2 to 2.3.
Apparel specialty store sales were virtually flat. This sector, which includes brands like Gap, J.Crew, and Chico’s, continued to fare better than department and discount stores, a trend that is expected to continue through this year as consumers gravitate toward their easy-to-navigate stores and e-commerce sites. However, aggressive promotion in February resulted in very low sales growth. Specialty store inventories surged 4.6% in January, more than December’s 3.5% increase and their biggest jump in almost a year. We have already begun to see the effect of lackluster sales growth in fourth quarter and full-year profitability as retailers release their financial results.
Sales at the combined department, chain, discount and apparel specialty retail sectors, a traditionally reliable barometer of total apparel sales, fell by 2.1% in February on a 12-month smoothed basis. It was not all that surprising given the rough weather. January inventories for the combined sectors advanced by 3.7%.
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