Retail sales head down in January, according to NRF and Department of Commerce
February 13, 2014
A combination of harsh January weather and post-holiday consumer malaise appear to be the drivers for lower retail sales for the month, according to data released by the National Retail Federation and the United States Department of Commerce today.
Commerce reported that January retail sales at $427.8 billion were down 0.4 percent compared to December (which was revised from 0.2 percent growth from November to December to -0.1 percent) and up 2.6 percent compared to January 2013. Total retail sales from November through January are up 3.4 percent annually, and it added that total retail sales for all of 2013 were up 4.2 percent compared to 2012.
NRF reported that January retail sales, which exclude autos, gas stations, and restaurants, were flat on a seasonally-adjusted basis from December to January and were up 3.0 percent on an unadjusted basis annually.
“Harsh winter weather is masking the performance of the broader economy,” NRF Chief Economist Jack Kleinhenz said in a statement. “Extreme temperatures and severe ice and snow are making it increasingly difficult to assess if the retail sales slowdown is temporary or a telling sign of a longer lasting weakness in the consumer-fueled economy. No one can jump to any solid conclusion until we shovel out of the snow.”
As previously reported, with retail sales growth still relatively modest, there still remains a mixed bag of signals and headwinds on the economic front, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.
These things continue to occur, though, against the backdrop of sluggish GDP growth and general uncertainty regarding the economy.
At recent industry conferences, many shippers and carriers were optimistic about fourth quarter retail sales, spurred on in large part by increasing e-commerce activity. Shippers told LM that heading into the holiday shopping season they were allocating inventory and watching inventory levels with a watchful eye and careful planning in advance of holiday shopping before it kicked off.
And that eye on inventory levels is likely to continue, according to Ben Hackett, founder of maritime consultancy Hackett Associates and author of the monthly Port Tracker report, which is co-published by Hackett and the NRF.
Hackett said in the most recent edition of the Port Tracker report that the inventory-to-sales ratio is still high at a time when it should be declining seasonally.
And in a recent interview he explained that this indicates slower retail sales can lead to caution on the part of importers in terms of making sure they have stocks in, and added it is strange that they are still at such high levels. Over the coming months, he said this will require a watchful eye and should it head down it suggests things are moving strongly from both a logistics and sales perspective.
“Many households shied away from shopping malls, restaurants and automobile dealerships since they were not willing to brave the cold, ice and snow,” said IHS Global Insight U.S. Economist Chris Christopher. “For some retail channels such as building material and garden supply stores, inclement weather can be a double-edged sword. Unseasonably colder weather or snowstorms can slow down home improvement projects but it can also cause a flurry of Americans buying shovels, salt and power generators. This report clearly indicates that weather was a major factor in spending patterns in January. Some of the spending that was delayed in January is likely to be pushed into the latter part of the first quarter – auto sales are a good example. However, we are not expecting much positive payback for restaurants. Unfortunately, the February retail sales report is looking like another bad weather story as well.”
Last week, the NRF said that it expects 2014 retail sales, not including automobiles, gas stations, and restaurants, to head up 4.1 percent compared to 2013, which is ahead of the preliminary 2013 increase of 3.7 percent over 2012. And it also said that the fervent pace of e-commerce activity will continue, with a projected 9-to-12 percent increase in online sales.
“We are looking forward to an even better year this year for retailers than we saw last year,” said NRF President and CEO Matthew Shay on a conference call last week. “Based on same-store comparable numbers, it is pretty clear that the severe weather that impacted many parts of the country had an impact on [comp] sales, as well as aggressive promotion and discounting that took place throughout the entire holiday season. From Black Friday forward, we knew things would be very promotional, with a great deal of opportunities to take advantage of promotions.”
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