February Retail Sales

Pfreemanevans | March 13, 2008, 05:40 PM

The commerce department reported a .2% decline in retail sales today which was below what economic analysts were projecting (.2% increase). Disappointing to be sure, but not entirely unexpected due to the hammering consumers have taken over the last few quarters and the addition of disappointing employment numbers. We are seeing a continuing trend of consumers shifting their purchases from discretionary items like consumer electronics and home products over to more necessary items like food, apparel and HBA. Consumers have finally started decreasing their spending on gas as well. So overall consumers are reacting to the dismal news they hear on a daily basis.

Some bright spots are likely due to this shift in spending. Wal-Mart increased, as did Costco and Target. JC Penny and Nordstrom were down even though they said apparel categories were relatively strong. And we are hearing conflicting reports about the upscale and luxury markets. Saks did well, increasing by 3.4% across same stores, but Burt Tansky from Neiman Marcus said he was seeing softening from his top customers.

Still online fares pretty well, with many retailers reporting very strong growth. We don't expect online growth will be too severely impacted by this difficult market unless a recession becomes very deep and very long. Newness and high end customers will bolster online sales through a slow down most likely.