WASHINGTON — Apparel and accessories stores showed the only sign of sales growth in December for the fashion sector during the crucial holiday season, as consumers pulled back on holiday spending at department stores and general merchandise stores, which each posted sales declines, a U.S. Commerce Department report showed Thursday.

Sales at specialty stores rose a seasonally adjusted 0.7 percent to $19.1 billion in December compared with November. But sales at department stores and the broader general merchandise store category, which includes discounters and department stores, did not fare as well. Department stores posted a 0.2 percent sales decline to $15.2 billion in December, while sales at general merchandise stores fell 0.8 percent to $52.7 billion.

RELATED STORY: Fed Report Shows Retail Improvement >>

On a year-over-year basis, sales at apparel and accessories stores were up 6 percent compared with December 2010, while sales at general merchandise stores were 2.7 percent higher. Sales at department stores were 1 percent lower than a year earlier.

In the overall economy, retail sales increased 0.1 percent to $400.6 billion in the month, off the pace of a 0.4 percent revised increase in November.

“I think the story that is most interesting is clothing and accessories stores [sales],” said Kevin Regan, senior managing director of FTI Consulting, noting that they were up 6 percent over December 2010 and in the November yearly comparison were up 3.5 percent. “They are showing some solid results, but there is a cautionary tale in apparel. We don’t know how profitable the last two months were.”

Regan said robust promotions and steep discounting could take a toll on margins.

“Rather than being surgical, stores seemed to be more broad-based [in their discounting],” Regan said. “In malls, we were seeing 20, 30, 40 percent off in the entire store. That tells me that some apparel retailers were trying to get out of inventory so they would be ready for the next season.”

He noted that unseasonably warm winter weather affected retail sales of cold weather apparel gear, particularly in the Northeast, which, combined with deep discounting, will likely impact fourth-quarter earnings.

Regan said Nordstrom Inc. and Saks Inc. “had very solid months” at the end of the year, while Macy’s is “probably one of the best stories of the season.” But stores such as J.C. Penney Co. Inc., Kohl’s Corp.  and Bon-Ton Stores Inc. did not have a good December and were flat or under last year, he added.

“General merchandise and department store sales were not in positive territory for any month in the last quarter of 2011,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight.

Christopher noted that retail sales grew at the slowest pace since May and that core retail sales, excluding autos and gasoline, were flat after “being above water since July 2010.”

“It is blatantly clear that the heavy discounting in the last quarter of the year impacted retail revenue,” Christopher said. “There were winners and losers on the retail chain store front,” adding that while holiday sales in November and December were up 4.1 percent, many retailers “took a hit on margins.”


load comments
blog comments powered by Disqus