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Hurt by Payroll Tax Increase, Retail Sales Growth Slips in January

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Overall retail sales growth slipped in January, but apparel managed to eke out an increase thanks to an improvement at department stores, according to U.S. Department of Commerce data released today.

Total retail sales rose by 4.4% on a 12-month smoothed basis, slightly less than November’s and December’s growth rates of 4.6% and 4.9%, respectively. The data suggest that consumers continued to spend carefully and to seek value, particularly in light of higher taxes that eroded paychecks.

Auto sales have benefitted from record numbers of people replacing older cars and trucks in the past few months. Excluding autos, total retail sales increased by only 3.1% in January.

Total retail inventory increased by 7.1% in December (the most recent month for which this measure is available), less than November’s 7.5% increase. The total retail inventory-to-sales ratio remained flat for the second month in a row.

Retail Jan 1

Apparel sales were helped by widespread clearance sales held at department and specialty stores to reduce bloated inventories. The mid-month arrival of cold weather in the Northeast sent consumers out shopping for outerwear, boots, and other seasonal items.

Department, discount and chain stores fared better in January than in recent months. Sales were virtually flat in January, compared to an almost 3% decline in December on a 12-month smoothed basis. Many retail chains implemented major clearance sales during the month, which helped drive traffic. Big store inventory dropped by 2.4%, and the inventory-to-sales ratio rose slightly.

Retail Jan 2

The specialty apparel store sector enjoyed sales growth of 3.6% in January which, though not as high as December’s 5% increase, was helped by rampant clearance sales. Inventory rose by 6.4% in December, but the inventory-to-sales ratio remained even with November’s 2.4%.

Retail Jan 3

The combined department, chain, discount and apparel specialty retail sector, a traditionally reliable barometer of total apparel sales, enjoyed a sales improvement of 1.7% on a 12-month smoothed basis, slightly better than the prior month.

Retail Jan 4

The fastest growing sector in retail in January was the nonstore channel which, driven by gains in e-commerce, rose 15.5% on a 12-month smoothed basis, to a seasonally adjusted $39 billion in sales, making it bigger than both the department and specialty store channels combined. Apparel remains a relatively small yet growing portion of this segment.

 

Retail Sales & Inventory
$MM — Adjusted for Seasonality

Jan-13

Dec-12

Jan-12

Total US Retail Sales

416,633

416,107

399,174

Department Store Sales

15,171

15,018

15,262

Apparel Specialty Stores

20,278

20,343

19,416

Total Dept & Specialty

35,449

35,361

34,678

Dec-12

Nov-12

Dec-11

Total Retail Inventory

509,998

507,713

472,027

Dept Store Inventory

29,724

29,402

30,933

Apparel Specialty Inv

48,947

48,297

46,199

Dept & Spec Inv:Sales

2.22

2.20

2.22

 

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