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Department Store Sales Slip Again in February

Retail sales stayed strong in February, but department stores continued to suffer sales declines.

The U.S. Census Bureau’s advance monthly report released last week disclosed that retail sales, which include gasoline, groceries and automobiles, totaled almost $474 billion in February—an impressive 5.7% increase over February 2016’s $448.6 billion, but only 0.1% higher than last month.

On a 12-month smoothed basis, retail sales rose by 5.9%, the second biggest increase in the measure in almost three years.

Once again, the biggest driver of sales growth was in the automobile sector, where sales grew by 6.7% on a 12-month smoothed basis.

Clothing and accessories specialty stores turned in another decent month, with sales up 1.6% year-over-year to $21.6 billion, or more than 2.5% on a 12-month smoothed basis.

However, department, chain and discount stores saw their sales tumble again—this month by 4.6% to $12.6 billion, evidence of the challenges this sector is facing. Macy’s and J.C. Penney are closing stores, the demise of Sears seems imminent, and this past week Gordman’s filed for bankruptcy.

The combined department, chain and specialty channels—what we call the apparel-oriented stores given their huge share of the market—dropped by 0.8% to $34.2 billion, which translated to a 0.4% decrease on a 12-month smoothed basis which, driven by specialty store gains, was the second best showing in the combined sector in nearly two years.

Sales at non-store retail, which includes pure-play e-commerce, increased by 13 percent in February to almost $50 billion, driven by continued gains by Amazon and others.

The total retail inventory-to-sales ratio rose slightly in January, the most recent month for which the data are available, but fell for department, chain, discount and apparel stores, as apparel retailers continued to implement more conservative sourcing strategies and order closer to need.