RETAIL SALES GREW 0.2 PERCENT IN FEBRUARY

February retail sales grew 0.2 percent seasonally adjusted over January and 0.8 percent unadjusted year-over-year, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“Sales growth held up well, given warmer than normal weather and tax refund delays,” NRF Chief Economist Jack Kleinhenz said.

“While consumers benefit by purchasing more for less, the top-line retail numbers reflect a lack of pricing power and, in many cases, hide underlying consumer demand.”

“While consumer spending in the first quarter has been erratic and most often weak, it registers positive improvement as the year continues,” Kleinhenz said.

On a three-month moving average year-over-year, retail sales have grown 2.8 percent. When looking at business lines, performance in February was very mixed as electronics and appliance stores saw declines while building materials and garden supplies saw solid growth.

A few specifics from the report include:

  • Online and other non-store sales increased 1.2 percent over the previous month and increased 8.2 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores decreased 0.5 percent seasonally adjusted from the previous month and decreased 1.1 percent unadjusted year-over-year.
  • Sales at general merchandise stores decreased 0.2 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales decreased 2.8 percent seasonally adjusted over the previous month and decreased 9.8 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales increased 0.7 percent over the previous month and increased 1.4 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 1.8 percent seasonally adjusted over the previous month and increased 3.7 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 0.4 percent seasonally adjusted over the previous month and decreased 6.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 2.7 percent unadjusted year-over-year.

FOLLOWING JOB GAINS IN JANUARY, RETAILERS SCALE BACK IN FEBRUARY

Retail industry employment decreased by 31,300 jobs in February from January, offsetting gains made the previous month, the National Retail Federation said today. The retail numbers exclude automobile dealers, gasoline stations and restaurants. Despite the correction in retail, the overall economy gained 235,000 jobs in February, the Labor Department said.

“Mild weather contributed to retailers scaling back employment in February, reversing the gains the industry made in January,” NRF Chief Economist Jack Kleinhenz said. “However, the surge in consumer and business optimism may have propelled the economy-wide increase in jobs last month and supports our prediction for stronger consumer spending and retail sales for 2017.”

Average hourly earnings were up 2.8 percent year-over-year, compared with 2.5 percent in January.

The Labor Department said February unemployment fell to 4.7 percent, down from 4.8 percent in January.

RETAIL SALES UP 0.4 PERCENT IN JANUARY

January retail sales grew a solid 3.8 percent unadjusted year-over-year and 0.4 percent seasonally adjusted from an already-strong December, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment.”
Jack Kleinhenz
NRF Chief Economist

“The retail industry started the year on a high note, continuing the momentum from the 2016 holiday season. The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment,” NRF Chief Economist Jack Kleinhenz said.

“We haven’t seen strong January growth in several years, which indicates that consumers are increasing their spending and remain the leading driver of the economy,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors, with the exception of non-store, which was flat in January.

A few specifics from the report include:

  • Online and other non-store sales were flat over the previous month and increased 14.5 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores increased 1 percent seasonally adjusted from the previous month and increased 0.4 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.9 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 1.6 percent seasonally adjusted over the previous month and decreased 1.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales were flat over the previous month and decreased 0.3 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 6.6 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 1.8 percent seasonally adjusted over the previous month and decreased 3.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 9.4 percent unadjusted year-over-year.

Christmas Sales Are Expected to Be Strong This Year

Retail sales should jump a solid 3.6% this year

Finally.

U.S. retailers can expect a strong holiday season this year, buoyed by income gains and rising consumer confidence according to the National Retail Federation.

The industry group forecast holiday season sales—excluding car sales, gas and restaurants—would rise 3.6% to $655.8 billion, well above the 10-year clip of 2.5% growth and better than the 3% rise for the 2015 Christmas period. And online business should be a big help, rising as much as 10% during the period.

The holiday season is crucial for many retailers, making or breaking the year for some chains and generating as much as 30% of sales.

2016 has proven to be a challenging year so far,particularly for stores like Macy’s, M 0.77% Kohl’s KSS 0.91% and Target TGT -0.04% , which had to deal with sales declines last quarter. Shoppers are moving online and also away from apparel, making it tough going for many such chains. A notable exception has been Walmart WMT -0.36% , which has fared well thanks to improved customer service, fewer out-of-stock items, and an improved e-commerce site.

And as Walmart and Amazon.com AMZN -0.32% have shown so far this year, retailers will engage in pricing warfare to outdo one another: Target for one has said it needs to re-emphasize its low prices in its marketing given the competitive environment. And weak traffic at hundreds of malls is hurting the like of Macy’s and Gap Inc GPS -0.18% .

But at least shoppers are in a better mood heading into the holiday season. “Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” NRF chief economist Jack Kleinhenz said in a statement, adding that anxiety about the outcome of the election could weigh on shoppers’ mood.

And once again, retailers will have to fight extra hard with Amazon to give shoppers a reason to come to stores, or at least to their websites. Last year was the first year more shoppers went online on Black Friday than to stores. This year eMarketer expects digital sales to surpass 10% of total holiday season revenue for the first time, while a recent study found that nearly half of all online shopping searches begin on Amazon.

In a separate forecast, PwC estimated holiday spending would increase 10% during the 2016 season, though stores would struggle to get their share since shoppers will be spending proportionately more on experiences and travel.

a OCTOBER 4, 2016,

RETAIL SALES GROW AT ‘SOLID’ PACE, UP 0.8 PERCENT IN JUNE

Retail sales (excluding automobiles, gasoline stations and restaurants) continued to grow in June and were up 5.1 percent year-over-year, the National Retail Federation said today. Retail sales rose 0.8 percent unadjusted over May, according to NRF’s calculations.

“The consumer sector remains a visible and healthy force in the economy and is expected to fuel growth in the second half of 2016.”
Jack Kleinhenz
NRF Chief Economist

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” NRF Chief Economist Jack Kleinhenz said. “Consumer spending rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016.”

Most retail segments reported monthly gains, except for clothing and clothing accessories that reported a decrease and electronics that remained flat. Outsized gains were evident for building materials and supplies and were probably related to the strength in the housing market. In June, the three-month moving average of retail sales on a year-over-year basis increased 3.8 percent unadjusted.

“The bottom line is that today’s data shows that the consumer sector remains a visible and healthy force in the economy and is expected to fuel growth in the second half of 2016,” Kleinhenz said.

A few specifics from the report include:

  • Online and other non-store sales increased 1.1 percent seasonally adjusted over the previous month and 13.9 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores decreased 1.0 percent seasonally adjusted over May and decreased 0.1 percent unadjusted over last year.
  • Sales at general merchandise stores increased 0.4 percent seasonally adjusted over the previous month and 1.1 percent year-over-year.
  • Electronics and appliances stores’ sales stayed flat at 0.0 percent seasonally adjusted month-to-month and decreased 3.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales increased 0.5 percent over the previous month and 3.0 percent unadjusted over last year.
  • Sales at building materials and supplies stores increased 3.9 percent over the previous month and 7.4 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 0.8 percent seasonally adjusted month-to-month and 6.1 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted month-to-month and 8.2 percent unadjusted year-over-year.

Robin Roberts July 15, 2016

Survey: Families stock up for back to school after tightening belts last year

Families that decided to get another year’s use out of backpacks and laptops during last summer’s back-to-school shopping season are ready to reopen their wallets, according to a National Retail Federation survey released Thursday.

An average family with children in the elementary to high school range will spend about $673.57 on back-to-school items including clothing, electronics and other supplies, up nearly 7 percent from last fall.

Total back-to-school spending is expected to hit $27.3 billion this year. Add in school-related spending by families with college students, and the figure rises to $75.8 billion, up from $68 billion the year before.

Average household back-to-school spending has grown over the past decade, but often rises and falls as families stock up one year, then cut back as they get a second year out of longer-lasting purchases, said Ellen Davis, the retail trade group’s senior vice president of research and strategic initiatives, on a media call discussing the survey results

The $673.57 figure is up from $630.36 last year but only slightly tops the $669.28 the average family planned to spend in 2014, according to the NRF.

“The jeans might be too tight this year and the glue sticks might be dry and it’s time for a new iPad. That means a lot of families are going to be heading to the stores and online for back to school,” Davis said.

Families also may be feeling a little more confident about the economy, encouraging them to spend a little more, said Jack Kleinhenz, the NRF’s chief economist, on the call.

An increase in the number of shoppers with students going to college, who typically need more big-ticket items than families with younger children, helped boost overall school-related spending even as the amount the average family with college students planned to spend, $888.71, dipped slightly from last year, according to the trade group.

An increase in spending on electronics for younger students could be driving some of the growth in back-to-school spending as college spending stayed relatively flat, Davis said.

“Ten years ago, you saw a lot of college freshmen making big electronics purchases,” she said. “Now you’re seeing it shift to younger grades.”

Shoppers also said they’re planning to start back-to-school shopping earlier this year to spread out their budgets. There was a 10 percent increase in the percentage of families doing back-to-school shopping online, but discount stores are still the most popular choice, followed by department stores and clothing stores, according to the survey.

The survey, conducted for the NRF by Prosper Insights & Analytics, polled 6,809 consumers for a week in late June and early July.

lzumbach@chicagotribune.com

July 21, 2016

Twitter @laurenzumbach

You’re spending more on shirts and sweaters

Sorry, shoppers.

After two years of declining apparel prices, the latest batch of government reports shows consumers are finally spending more on T-shirts and sweaters.

According to the Consumer Price Index released Wednesday, the apparel index in February posted its largest increase in seven years, rising 1.6 percent. It was the second straight month of higher apparel prices, after they ticked up 0.6 percent in January.

Prior to January, apparel prices had fallen for four straight months.

This inflection signals that retailers’ efforts to trim their inventories — and as a result, drive more full-price selling — are starting to take hold. But it’s still too early to call victory.

“I think it’s probably more of an indication of a comparison issue,” Perkins said. “We had a lot of clearance merchandise obviously in January, and coming into February you finally see some more full-price selling.”

Discounts were particularly prevalent during December and January, as unseasonably warm weather left retailers with a glut of coats and jackets.

But over the past few months, retailers from Express to Jos. A. Bank have taken steps to reduce shoppers’ reliance on steep discounts. They’ve done so with varying success.

While a more thoughtful promotional strategy and better management of its merchandise helped Express beat Wall Street’s comparable sales and earnings estimates, Jos. A Bank’s comparable sales plunged 32 percent during the fourth quarter. Revenues at the retailer, which was acquired by Men’s Wearhouse in 2014, have taken a beating since it did away with its famous Buy One Get Three Free promotions.

Woman shopping

Hill Street Studios | Getty Images

Jack Kleinhenz, chief economist for the National Retail Federation, said he is hopeful that February’s results are a sign that retailers are starting to see some “stickiness” on prices. But he also expressed concern that they received a boost from favorable weather, or that the number could receive a downward revision next month.

“I’m pleased to see [the data] to a certain extent, but I’ve also go to look at it with squinted eyes,” he said. “We need to see some notable changes on more than just one month.”

Though Perkins was skeptical that apparel prices would continue their recent ascent, he said the steep declines the category experienced last year are unlikely to continue. Instead, he predicts clothing prices will stay stable, particularly if consumers respond favorably to the new spring product.

Paired with Tuesday’s retail sales data, which showed that revenues at clothing stores were up 3.2 percent during the first two months of the year, Perkins said there are “burgeoning signs” that that apparel could be bouncing back.

Still, he cautioned that retailers are facing numerous headwinds, including the growth of fast-fashion and off-price retailers, wage pressures and necessary investments into digital shopping.

“Apparel has a chance to rebound here,” he said. “It really has been neglected over the past several years.”

NRF Calls for 3.1 Percent Growth This Year

Following a slower-than-expected holiday season that came in roughly 25 percent below forecasts, the National Retail Federation is projecting retail sales will continue to creep along in 2016.

The industry trade organization on Wednesday said it expects annual retail sales to rise 3.1 percent this year, which would be flat with its preliminary results of 3.1 percent recorded growth in 2015.

Shoppers carry bags while walking inside the Westfield San Francisco Centre in San Francisco.

David Paul Morris | Bloomberg | Getty Images
Shoppers carry bags while walking inside the Westfield San Francisco Centre in San Francisco.

Though the 2016 forecast is flat with last year’s growth figures, the NRF said a 3.1 percent increase (excluding automobiles, gas stations and restaurants) is above the 10-year average of 2.7 percent growth.

“Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments — particularly in China — we think 2016 will be favorable for growth in the retail industry,” NRF President and CEO Matthew Shay said.

“All of the experts agree that the consumer is in the driver’s seat and steering our economic recovery.”

Jack Kleinhenz, the NRF’s chief economist, said he expects the first half of 2016 will be weaker than the latter six months, thanks to limited first-quarter momentum and inventory levels that remain high.

As retailers continue to work through this excess product, which was largely left over due to the unseasonably warm end to 2015, Kleinhenz said he expects retailers will continue discounting their products to get consumers shopping.

Still, he predicts that as the year progresses, the labor market will continue to improve, payroll growth will pick up and gas prices will remain low — all of which should drive consumer confidence higher.

“The first quarter has been especially weak for the last three years,” Kleinhenz said.

Indeed, NRF predicted last February that full-year sales would increase 4.1 percent compared to 2014. But in July, the group lowered its forecast to 3.5 percent growth, citing unexpected slowness in the first quarter.

It attributed the industry’s underperformance to cold and snowy weather, a backlog of deliveries due to conflict at the West Coast ports and a stronger U.S. dollar. At that time, the group said sales had increased 2.9 percent during the first half.

According to NRF, during the critical months of November and December, sales rose 3 percent to $626.1 billion, falling short of its forecast for 3.7 percent growth during the period. The organization attributed the shortfall to unseasonably warm weather and deflationary prices.

Early holiday-quarter reports from individual retailers have been mixed. While Coach, Michael Kors and Under Armour all reported better-than-expected results, Kohl’s last week slashed its 2015 profit forecast. And last month, Macy’s lowered its guidance for the second time in two months.

“The economy had a bumpy ride in 2015 with fits and starts along the way,” Kleinhenz, said.

“Despite the volatility, the economy continued to reduce unemployment, raise wages and actually increase real GDP by 2.4 percent. Lower gas prices are creating more discretionary income to save, pay down debt, and spend on travel, eating out and personal services.”

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MONTHLY ECONOMIC REVIEW: INDICATORS MATCH EXPECTATIONS FOR YEAR OF THE GOAT

The Year of the Goat is a hot topic among retailers and those who celebrate the Chinese New Year. Experts in Chinese astrology say that the outlook for finance and wealth is favorable but exercise caution as there will continue to be volatile political situations causing economic activity and prices to fluctuate.

The indicators outlined in February’s Monthly Economic Review suggest the same outlook. The economy is recovering but continues to be characterized by fits and starts and highs and lows; while I remain optimistic about overall growth for the retail industry in 2015, recently released economic data have come in weaker than expected — puzzling, as the latter half of 2014 showed rapid growth in several areas.

Retail sales came in January lower than expected, but it remains unclear if it is due to seasonal issues like the weather or weaker consumer demand. Consumer sentiment remains strong but continues to fluctuate, reflecting a skittish American consumer. On the other hand, January registered another solid gain in payrolls, and if the rebound in wages isn’t a one-off wonder, there is much to look forward to.

This month’s full report includes these highlights:

Retail Sales

The extra money coming from lower gas prices may be going toward savings, paying off debt or spending on services rather than retail goods and merchandise.

Retail Sales and Consumer Sentiment

The softening in retail sales and consumer sentiment poses some downside risk for consumer spending in the first quarter of 2015.

E-commerce

E-commerce sales continued to grow but the pace of growth slowed from 3.6 percent in the previous quarter to 2.3 percent in the fourth quarter.

Gross Domestic Product and Unemployment

GDP is expected to increase 2.7 percent in the first quarter of 2015 and the unemployment rate is set to decrease from 5.7 to 5.6 percent.

Housing Market

Attractive mortgage rates and easier credit conditions along with stronger job and income growth are reinforcing expected growth in the housing market in 2015.

Employment

As the labor market continues to expand, the unemployment rate should drop, enabling wage growth to slowly begin to increase. Wages should pick up between 2.5 and 3 percent on an annual rate in late 2015 and early 2016.

Retail Jobs and Openings

Total retail employment across all industry segments increased 45,900 to 15.6 million in January. There were 434,000 job openings in the retail industry on the last business day of December.

Personal Income and Spending

The wage and salary component of personal income improved a meager 0.1 percent in December and seems to be at odds with the strong December employment report. Nonetheless, wage growth is stronger than last year and is trending modestly higher despite December’s weak growth.

Chicago Fed National Activity Index

The index is well above zero, indicating the economy is growing above its historical trend; some inflationary pressure in the coming months is expected.