Apparel Retail Sales Start to Slip Again in March

Shopping for apparel is slipping again.

Sales at specialty apparel and accessories stores fell last month 0.5 percent to $21.98 billion, from $22.10 billion in February, after inching up slightly in January. Sales at department stores followed a similar track, with March sales down 0.3 percent to $12.52 billion, from $12.55 billion, according to new seasonally adjusted Census Bureau data.

Compared with a year ago, things in specialty look a bit better, with sales up 1.7 percent. But department store sales are still down 0.9 percent.

Meanwhile, nonstore, or online retail, continued to grow. Sales in that sector, which is not broken out by product type, in March hit $55.47 billion, a 0.8 percent increase from $55.01 billion in February. Non-store sales are up 8.8 percent from March of last year.

Retail sales overall, including food but excluding the automotive sector, grew 0.5 percent, hitting $494.55 billion, from $491.79 billion in February. Compared to last year, total retail sales are up 4.3 percent.

Despite the mixed results and clear gains in online shopping, Jack Kleinhenz, chief economist for the National Retail Federation, characterized the report as “healthy,” especially given “market volatility, unseasonable weather and uncertain economic policies.”

To be sure, the weather, particularly in the Northeast, has been severe, with winter storms coming temperatures dropping well into what should be spring. And the prospect of a trade war between the U.S. and China is looming.

“The biggest risk to spending is in market fluctuations that could affect confidence,” Kleinhenz added.

Kathleen Navin, a director at IHS Markit, pointed to the partial arrival of income tax refunds at the end of February, along with some onetime bonuses certain large corporations offered to employees after calculating the windfall they’re to receive as a result of the historically low corporate tax rate put into effect by new tax legislation.

“[Both] provided a boost to consumer finances which translated into additional spending at stores and restaurants in March,” Navin said. “Restaurants showed strong 0.4 percent gains in both February and March, while grocery store sales growth was only half as rapid. These boosts to spending appear to have outweighed what we estimate was drag on spending from harsh winter weather in March.”

The cut to corporate taxes alone is set to add an estimated $1 trillion to the federal deficit, while Republican-backed tax legislation as a whole is expected to add $1.5 trillion. Last year’s deficit stood at $665 billion, and in the current fiscal year it is expected to grow to $804 billion, according to new government estimates.

Navin also noted that online sales growth has outpaced that of department stores for the last five months, which included a record holiday shopping season.

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