COMMERCE DEPT. CONFIRMS NOVEMBER SALES WERE TOUGH
WASHINGTON — Data released Wednesday by the Commerce Department reconfirmed that apparel retailers had little to crow about last month,
At general merchandise stores, November sales on a seasonally adjusted basis were flat against October and were up 2.8 percent compared to November of last year. While the annual number may seem sound, “the last two months for general merchants have been the worst since the last recession on a year-over-year basis,” said Ira Silver, chief economist at J.C. Penney Co.
“The numbers year-to-year are very disturbing,” Silver said. In October, general merchandise sales dropped 1.3 percent against September while gaining 2.5 percent against a year earlier.
In November, sales at department stores, a part of the general merchandise category, increased 0.7 percent for the month and 3.7 percent over the year. However, the month-to-month gain only made up for half of department stores’ 1.4 percent sales decline in October against September. For the department stores, sales in October gained 3.2 percent against a year ago.
Apparel specialty stores showed marked strength on a month-to-month basis in November, with sales rising 2.8 percent against October. However, last month’s gain followed a decline of 2.3 percent in October against September. Sales declined over the year by 0.4 percent.
“Specialty store sales have been jumping around, one month up a lot and one month down,” Silver said. “It’s [more accurate] to look at the year-over-year numbers, and they’ve been mostly negative this year.”
Despite the generally poor reading, Donald Ratajczak, director of the Economic Forecasting Center at Georgia State University, said the data are probably unrealistically positive. Commerce evaluates a disproportionate amount of data from the first 20 days of each month, and in November many retailers reported declining sales toward the end of the month, he said.
The November numbers will likely be revised downward in the next Commerce report, when more data are in, said Ratajczak, who is expecting flat same-store sales for the holiday season.
Isaac Lagnado, principal with Tactical Retail Solutions, a consulting firm based in New York, took issue particularly with Commerce’s specialty store sales estimate. Lagnado said his organization estimates those sales declined by 1.5 to 2 percent, compared to Commerce’s 2.8 percent gain.
“We think there’s something fundamentally wrong in Commerce’s sampling,” Lagnado said.
According to Wednesday’s numbers, retail sales overall rose 0.8 percent against October and 3.2 percent against November 1994. Silver noted that overall consumption and personal incomes are both up about 3.5 percent for the year, “but in our sector, it’s much lower.”
Silver blamed poor apparel sales primarily on deflation in the industry and also on the slowing economy. “I think an interest rate cut and maybe a tax cut are the only things to get the economy going at this point,” he said.
The Federal Open Market Committee meets Dec. 19 to evaluate economic data and possibly cut interest rates. — Fairchild News Service