WASHINGTON — First-quarter results from department stores may have boomed because of strong demand for clothing, but the three apparel and accessories store categories all posted a drop in retail sales in April, even while showing some strength compared with a year ago.
Clothing and accessories store sales fell 2 percent to $15.6 billion last month, but sales surged 8.2 percent against April 2003, according to the Commerce Department’s retail sales report released Thursday. The decline in April mirrored the softness seen last week in comparable-store sales for the month, which rose only 3.9 percent compared with 6.8 percent in March.
The Commerce Department said Thursday that department store sales, stuck in a long-term decline, dropped 1.7 percent in April to $17.66 billion and were down 0.1 percent year-over-year. General merchandise store sales fell 0.8 percent to $41.24 billion, but climbed 7.2 percent over April 2003.
“There was a nice seven to eight months of growth [in overall retail sales] — then it hit a negative last month,” said Rajeev Dhawan, director of economic forecasting at Georgia State University. “I would blame it on higher oil prices, which takes purchasing power away from people.”
Carl Steidtmann, chief economist at Deloitte Research, said consumer spending is still strong despite the decline in retail sales in April. He pointed to the healthy increases in sales over a year ago.
“March and April are difficult to judge because of weather and because of where Easter falls,” said Steidtmann. “If you make month-to-month comparisons, it is hard to seasonally adjust for Easter because it never falls in the same place.”
In the overall economy, retail sales were down 0.5 percent, but gained 8 percent from April 2003.
“The things that drive consumer spending and confidence are cash flow, and cash flow into the household sector remains strong,” said Steidtmann. “There has also been job creation. The economy has added 850,000 jobs this year, which is a very large positive for consumer spending going forward.”
Dhawan said surging oil prices may dampen job growth, however.
“Ultimately, if oil prices remain high, after a while, companies will either scale back their operations, which means they will lay people off, or may not hire any more people, which will send a negative message to the consumer,” Dhawan said.
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