WASHINGTON — February sales fell at specialty and department stores compared with the previous month, contributing to a sell-off on Wall Street Tuesday that wiped out three days of gains.
The poor showing in the Commerce Department's monthly retail sales report came amid concerns about the rise of consumer spending and a growing home loan crisis. The stock markets plunged in reaction to the decline and the disclosure by the Mortgage Bankers Association that more homeowners are having trouble making their payments. The Dow Jones Industrial Average sank 2 percent to close at 12,075.96. Shares in the S&P Retail Index closed down 2.5 percent to 500.32.
Apparel and accessories stores posted seasonally adjusted sales of $18.4 billion, a 1.8 percent dip compared with January, but a 5.2 percent rise from a year earlier. At department stores, sales of $17.6 billion were down 1.6 percent from the preceding month and off 1.5 percent from February 2006.
The report confirmed in broad strokes what retailers reported last week in releasing generally tepid same-store sales. Individual company reports show that luxury consumer sales held up well, however.
Total retail and food service sales rose a seasonally adjusted 0.1 percent during February. Other sectors declining for the month included furniture and home furnishing stores and building supply merchants.
Describing the month as a "poor" one for retailers, Global Insight U.S. Economist Nigel Gault said, "The same bad weather that depressed last week's employment report also kept shoppers from the stores."
Department and specialty stores trimmed head counts by 8,500 in February compared with the preceding month, according to a Labor Department report last week.
"We expect that consumers will become increasingly cautious and that the savings rate will start to rise in the face of the housing downturn," Gault wrote in a report. "But income growth should still be sufficient to keep spending growth at about 3 percent this year."
The bad weather in February, however, meant that the sales figures underestimated the resilience of the consumer, he said.
"Consumer are not necessarily as flush as we think they are," said Paul Nolte, director of investments at Hinsdale Associates. "If they're going to start defaulting on their loans, guess what that means for retail sales? The consumer is struggling at this point."
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