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Apparel Sales Took a Beating in Holiday Season

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According to the most recent U.S. Department of Commerce data, sales at department, discount and apparel specialty stores fell in November and December, hurt by unseasonably warm weather that made winter clothes seem irrelevant and cars much more interesting.

Total adjusted retail sales rose by 2.2% compared to last December, to $448 billion, making up a bit for November’s sluggish 1.6% gain. On a 12-month smoothed basis, sales were up by 2.5%. RetailChart1

The continued decline in gasoline prices and the strengthening job market again helped automobile retailers—who collectively saw their sales jump by 5.8% on 12-month smoothed basis. Although this was the smallest monthly gain for autos in the past six months, the sector outperformed total retail. Taking cars out of the mix, retail sales increased by only 1.6%.

The non-store retail sector also enjoyed big gains, and sales, driven by gains by e-commerce players like Amazon, increased by more than 7 percent on a 12-month smoothed basis.

The sector comprised of department, chain and discount stores saw sales drop by 2.6% on a year-over-year basis in December, its third consecutive month of declining sales on a 12-month smoothed basis. Department stores continue to lose share to the off-price and specialty channels in apparel. Macy’s reported a pronounced slowdown in store traffic and holiday sales, and this month announced plans to close more stores.

RetailChart2

Apparel specialty stores sales rose by a mere 0.6% in December, to $21.1 billion. On a 12-month smoothed basis, sales fell slightly, their second decline in for the second time in three months. Throughout the season, virtually every retailer was deeply discounting coats, sweaters and cold weather accessories. But it didn’t help much.RetailChart3

For the combined department and specialty sector, a barometer of overall apparel, sales dipped by 0.7% on a year-over-year basis in December. On a 12-month smoothed basis, the decline was almost 1 percent.

RetailChart4

If there was one bright spot, it was that despite the disappointing sales in November and December, apparel retailers have kept their inventories pretty lean, rising by between 2 and 4 percent in the past couple of months, which has allowed the inventory to sales ratios to decline slightly.

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