WASHINGTON — Sales at department stores failed to recover in January after a weak holiday season performance, the Commerce Department reported Thursday in its retail sales tally.
Continuing a pattern of year-over-year declines in January, sales at department stores fell 5.1 percent against January 2002, while sales at general merchandise stores rose 3.5 percent against a year ago and sales at clothing and accessories stores were up 2 percent.
Compared with December, department store sales in January declined a seasonally adjusted 0.1 percent to $18.25 billion, while general merchandise store sales inched up 0.6 percent to $38.7 billion and clothing and accessories store sales rose 0.3 percent $14.83 billion.
Overall, retail sales fell 0.9 percent in January on a seasonally adjusted basis against December, but compared with January 2002, retail sales increased 3.9 percent. Excluding auto sales, which fell sharply in January, retail sales actually gained 1.3 percent.
"Outside of a few hot spots like home improvement stores, the retail numbers continued to look weak," said Frank Badillo, senior economist at Retail Forward.
He said sales at department stores were more likely even worse than the numbers suggested because Commerce also includes discount store sales in that category.
"Another thing affecting discount numbers is Kmart, whose sales are in the tank and dragging down discount and department store numbers," Badillo said. "Consumers started to tighten their belts in the fourth quarter and that will continue in the first half of the year as long as there is a threat of war and as long as there is job insecurity."
John Mothersole, senior economist at Global Insight, was a bit more bullish about the retail numbers. He said the numbers, excluding autos, bode well for retail sales later this spring, with the understanding that consumers keep spending at the same rate.
"We expect to see a gradual improvement in the recovery as the year goes on," Mothersole said.
He said some of the cautions, however, include higher energy prices, sluggish employment growth, decelerating wages and growing potential of war with Iraq. Mothersole added, "Although we are hopeful given the rate consumers continue to spend, which augurs well for later this spring, there are a lot of factors that are at play and may undercut the strength going forward."
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