WASHINGTON — Economists and retail experts said unseasonably cold weather in March led to the 0.4 percent decline in retail sales reflected in the Commerce Department’s monthly report released on Friday.
This story first appeared in the April 15, 2013 issue of WWD. Subscribe Today.
The weather dampened consumer demand and drove down sales at department stores a seasonably adjusted 1.1 percent to $14.6 billion last month and declined 1.2 percent to $51.1 billion at general merchandise stores, a category that includes discounters and department stores.
Apparel and accessories stores bucked the trend, edging up 0.1 percent to $20.3 billion last month.
“I think cold weather seemed to have a role in this,” said Andrew Fitzpatrick, director of investments at Hinsdale Associates. “It was a little disappointing and it really put a damper on the bottom line for retailers.”
Fitzpatrick said department stores “got weighed down by increasing margins and prices.”
“It has been a really challenging environment for these retailers who are trying to generate growth and higher profits,” he said.
Fitzpatrick said the sales growth in the specialty store category was likely due to a strength in demand for pieces that were not sensitive to weather, such as accessories and nonessential items.
“They have also found a nice niche with some of these goods that tend to attract buyers who know what they are looking for,” Fitzpatrick said.
Jack Kleinhenz, chief economist at the National Retail Federation, said, “The fall off in spending is no surprise. A colder-than-usual winter, an anemic employment picture and delays in tax refunds impacted consumer spending across the board in March. While we remain optimistic that retail sales will grow modestly this year, it seems like the economy is off to a shaky start as we enter the second quarter.”
In the overall economy, retail sales fell 0.4 percent in March to $418.3 billion, after rising in February.
“The weakness in March retail sales was across the board with restaurants and furniture being the exceptions,” said Chris G. Christopher, senior principal economist at IHS Global Insight. “Falling pump prices and a relatively strong stock market did not help retailers very much in March.”
Christopher said there were “positives” in consumer spending and demand, such as falling gasoline prices, a stronger stock market, improving housing market and modest inflation, although the overall outlook has worsened.
“This is a bad report,” he added. “Before this report, our first quarter real consumer spending growth outlook was standing at 3.3 percent. Now our forecast is standing at 2.8 percent.”