By  on April 15, 2008

WASHINGTON — Retail sales at apparel and accessory stores dropped in March. Results were driven down by an early Easter and an overall economic slowdown, despite an increase in sales for all retail and food service providers.

March sales for all retail and food service providers increased a seasonally adjusted 0.2 percent from February following a steep decline last month of 0.4 percent, revised upward from an initial 0.6 percent drop, according to the U.S. Department of Commerce on Monday.

Apparel and accessories specialty store sales dropped 0.5 percent in March from the prior month. Department store sales were flat compared to a month ago.

In a year over year comparison sales at apparel and accessory stores dropped 1.6 percent versus March 2007, to $18.6 billion. Department stores declined even more steeply versus last year, losing 4.1 percent of sales to $17 billion for the month.

“Much of the strength was in retailers that were impacted by increasing food and energy prices. Sales actually declined if you exclude gas stations, grocery stores and restaurants [from the overall sales number],” said Scott Hoyt, director of consumer economics at Moody’s

Gas prices spiked in March, said Brian Bethune, U.S. economist at Global Insight, which distorts the picture painted by the overall increase in retail and food services. Retail sales at gas stations in March increased 1.1 percent versus February, and increased 18.9 percent versus March of last year. Excluding gas there was wide spread weakness in March including the apparel sector, but the results were not a surprise, he said.

“There is an ongoing slowdown in real consumption,” Bethune said. “The economy certainly looks like it’s moving down, there’s not a lot more to it than that.”

Apparel and accessory retailer posted dismal comparable-store sales when they reported individual results earlier this month with the vast majority of retailers posting decreases. There were notable bright spots, namely in the discount sector where Wal-Mart Inc.’s discount stores, Costco and BJ’s all reported same-store sales increases of 0.9, 7 and 6 percent respectively.

“To some extent there is a definite shift to more of the big-box discounters in terms of where people are shopping. Consumers are moving away from the brands and moving more to generic bulk type purchases,” Bethune said.

Retail sales have bounced a bit over the last few months, which is partially attributable to calendar shifts like the earlier Easter and the extra leap year day that fell in February.

“Unseasonably cooler weather created a challenging sales environment for many apparel retailers last month,” said Rosalind Wells, chief economist for the National Retail Federation. “With the earliest Easter in 95 years, the calendar shift will likely impact April sales as well. In order to get a true picture of retail performance, we will need to look at both March and April sales combined.”

“There’s going to be some month to month volatility,” Bethune said.

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