Though on an overall basis U.S. retailers ended 2013 with neither a bang nor a whimper, according to just-released data from the Department of Commerce, apparel specialty stores had a great year, and continued to erode big store market share.
Total retail sales grew by only 4% in December on a 12-month smoothed basis, a bit slower than in November, but consistent with monthly growth levels we’ve been seeing pretty much all year. For the full year, total retail sales increased 4.3% over 2012.
The one difference in December’s sales performance compared to that of prior months, however, was the decreased impact from automobiles compared to prior months. Excluding automotive sales, which had their worst month in over a year, retail sales growth still jumped to almost 4%, from November’s 3% level.
Total retail inventory rose by a whopping 8% heading into the last month of the year, capping three months of accelerating growth. Rising retail inventories have been a concern for many industry watchers, and provide support for the claim that much of the sales surge in December was due to intensified promotions at retailers, which will no doubt show up in the form of sharp declines in operating margins for the fourth quarter and fiscal year.
The department, chain and discount stores sector, which includes department stores like Macy’s and Dillard’s, national chains like Sears and Kohl’s, and discounters like Walmart and Target, suffered its twenty-first straight month of declining sales. Seasonally adjusted revenues plunged 2.4% on a 12-month smoothed basis. Big store inventory was flat in November, down from its 1% increase in October, and causing the inventory-to-sales ratio to edge down slightly.
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Department store sales fell 4.4% in 2013 compared to 2012.
Apparel specialty store sales surged by 6.4%, their biggest monthly increase since March 2012. This sector, which includes brands like Ann Taylor, J. Crew, and Urban Outfitters, grew at the expense of department and discount stores during the Holiday 2013 season, a trend that is expected continue through next year as consumers gravitate toward their easy-to-navigate stores and e-commerce sites. Specialty store inventories rose by 1.2% in November, elevating their inventory-to-sales ratio slightly. However, we expect these stores to end the year with clean inventory positions after the healthy sales they enjoyed in December. Apparel specialty store sales grew by 4% in 2013 compared to 2012.
Sales at the combined department, chain, discount and apparel specialty retail sectors, a traditionally reliable barometer of total apparel sales, rose by a respectable 2.7% in December on a 12-month smoothed basis, the best performance in a year and a half, helped by the specialty store surge. November inventories for the combined sectors advanced by .7%.
