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APPAREL SALES SUFFER SETBACK IN MAY

WASHINGTON -- Sales at clothing and accessory stores dropped sharply by 2.8 percent in May, reversing a slight rebound in April, the Commerce Department reported Thursday.<P>Year-over-year, however, sales at clothing and accessory stores registered...

WASHINGTON — Sales at clothing and accessory stores dropped sharply by 2.8 percent in May, reversing a slight rebound in April, the Commerce Department reported Thursday.

This story first appeared in the June 14, 2002 issue of WWD.  Subscribe Today.

Year-over-year, however, sales at clothing and accessory stores registered a 2.3 percent increase.

At general merchandise stores and department stores, excluding leased departments, sales were not in much better shape, economists said. General merchandise stores posted a sales decline of 0.9 percent in May, while department stores reported a 2.2 percent decline. Year-over-year, general merchandise stores posted a 7.2 percent increase, while department stores fell 1 percent.

Sales at clothing and accessory stores last month were $14.33 billion. General merchandise stores reported sales of $37.96 billion, with department stores posting sales of $18.89 billion.

“It’s disappointing,” said Carl Steidtmann, chief economist at Deloitte Research. “Sales are weak in two areas: autos and apparel.”

Steidtmann attributed the declines to cheap imports and a shift in consumer spending to discount channels. “That drives the overall price structure down,” he said.

Steidtmann noted that sales have been in a mild deflationary cycle for a long time. Department store and apparel and accessory store sales have been declining on an aggregate basis for the past five years, he said.

“You are seeing a much more free-trade environment for apparel,” he said. “China joining the [World Trade Organization] points to several more years of declining prices.”

Charles McMillion, chief economist at MBG Information Services, said his biggest concern is stagnation in the stock market, which could have a major impact on consumer spending in the coming months.

“I’ve been looking for this fall in apparel prices for several months,” McMillion said. “The question is, is this the beginning of a strong pullback by consumers or is it a one-month pullback.”

He said he expects apparel and textile sales to be weak for some months.

Overall retail sales, excluding food and cars, declined 0.9 percent in May against April, but were up 1.9 percent against the year-ago period.

Steidtmann noted that there are bright spots in the overall economy, including strong consumer spending, a slight pickup in employment, falling gasoline prices and falling mortgage rates.

“Inventories are in good control and we’ve seen wage and labor well controlled, as well,” Steidtmann said. “They are managing the cost side of the business fairly aggressively.”