Although several department stores and apparel specialty chains are fighting for survival, there’s still strength in the retail industry.
That’s the perspective from Moody’s, the ratings and financial services agency, which on Friday issued a forecast for 3.5 percent retail sales growth in the U.S. in 2020. Moody’s cited consumer confidence, wage growth, low unemployment and continued gross domestic product growth for the positive prognosis.
Moody’s also cited growth in retail sales in January. “The 0.1 percent sequential increase in retail sales for January and a 4 percent year-over-year growth was as expected and demonstrates the resiliency of the consumer as the economy continues to grow and unemployment remains low,” said Moody’s vice president Mickey Chadha.
Moody’s said the industry is being paced by e-commerce players like Amazon, off-price retailers like The TJX Cos. and Ross Stores Inc., value and convenience-oriented stores like Dollar General and Dollar Tree, and discounters and warehouse clubs like Walmart Inc., Target Corp. and Costco Wholesale Corp.
Certain department stores and apparel specialty chains including Macy’s Inc., Kohl’s Corp., J.C. Penney Co. Inc., Ascena Retail Group, Sears Corp., Old Navy, J. Crew Group Inc. and Kmart Corp. have recently suffered weak results and initiated streamlinings, generating false impressions of a widely ailing industry.
“Despite some pockets of weakness, sales continue to be good, led by e-commerce, grocery stores and motor vehicles and parts sales growth of 8.4 percent, 2.5 percent and 5.7 percent year-over-year, respectively,” Chadha said. “Laggards continue to be department stores and electronics stores, with year-over-year sales declines of 5.5 percent and 3.2 percent, respectively. Sales for clothing stores were also lackluster, essentially being flat year-over-year.”