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Dept. Store Surprise: Nov. Sales Up 0.5%

Sales at apparel and accessories stores increased 0.2 percent during November, to $17.2 billion.

WASHINGTON — Even with the lingering impact of an active hurricane season, consumers felt free to spend last month, especially at department stores, though economists expect solid sales for retailers this holiday to taper off next year.

Sales at apparel and accessories stores rose 0.2 percent during November, to $17.2 billion, after adjustment for seasonal variations, according to the Commerce Department’s monthly sales report. Against a year ago, sales were up 7.3 percent.

Department stores managed a 0.5 percent increase for the month, to $18.1 billion, a 0.3 percent rise from a year ago.

The strong monthly showing from department stores, which have seen almost no growth since 2000, was unexpected, said Sara Johnson, managing director of global macroeconomics at Global Insight.

“Department stores are losing market share to the discount chains and the specialty stores, so the strength in department stores in November was a surprise and certainly a bit of an anomaly,” she said. “It goes against the longer trend.”

In the broader economy, retail and food service sales inched up 0.3 percent in November. That rise came despite a 5.9 percent drop at gasoline stations, a result of lower prices at the pump.

“Consumer spending has solid momentum entering the holiday shopping season,” said Johnson. “It’s smooth sailing through the holiday season, but there will be some restraint on spending in 2006.”

That restraint will come from rising interest rates and a cooling housing market, she said. “We certainly don’t expect a downturn in consumer spending, but growth will slow a bit.”

Standard & Poor’s chief economist, David Wyss, agreed that spending would slow some, but continue to chug on, supported by consumer debt.

“People are willing to go out there and spend money … even if they don’t have it,” said Wyss. “It can’t go on forever, but it can go on for a while.

“The economy’s doing extremely well,” he said. “It’s astonishing how little impact [Hurricane] Katrina appears to have had. We’re seeing very solid numbers going through.”

Preliminary figures for gross domestic product last month showed the U.S. economy growing at a clip of 4.3 percent during the third quarter.

This story first appeared in the December 14, 2005 issue of WWD.  Subscribe Today.

“Generally, we seem to be ignoring the storms, at least if you don’t live in New Orleans,” said Wyss.