US Spending Sees March Consumer Sales Rise 3.9%

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(Photo: Gisela Royo)
(Photo: Gisela Royo)

ECONOMY

  • S&P Retail Index up 0.8% in March
  • Apparel, discount, department stores see year-on-year increases in March
  • Retailers believe April sales will slow; International Council of Shopping Centers says sales could rise 3% - 4%

Earlier Easter preparations and spring temperatures stirred a spending frenzy as March sales rose for the 13th time in fifteen months. March sales rose 3.9% according to Retail Metrics, a figure higher than the 3.3% analysts were seeking.

Excluding Walgreen's decline, March's total sales reached 6.5%.

Roughly two-thirds of retailers exceeded analyst expectations. Although broader markets slowed, the S&P Retail Index rose 0.8%, reaching 625.25. March sales represent roughly 40% of first-quarter sales for most retailers according to Barclays Capital analyst Stacy Pak.

Ten of the twenty retailers tracked by Thomson Reuters surpassed Wall Street sales estimates. The largest increase came from clothing retailers. Apparel, discount and department shops all saw year-on-year increases in March according to Reuters.

Gap, the number-one US clothing chain, and Limited Brands both had March purchase increases of 8%, while Target and Macy's sales rose 7.3%.

High-end retailer Nordstrom reported an increase of 8.6%.

On the other end of the price spectrum, T.J.Maxx parent company TJX Cos. and Ross observed higher-than-expected sales rising 10%.

The home furnishing sector also grew. Pier 1 Imports nearly rose 3% after reporting a same-store sales jump of 10%. Bed, Bath & Beyond had a 10% purchase increase.

What Sparked March Spending?

Demand for all product sectors was higher this March, according to Reuters. Analysts believe warmer temperatures brought shoppers out of their homes and caused consumers to seek spring clothing earlier this year, despite the nearly full-priced items.

According to Planalytics, last month was the warmest month in over 50 years. Higher temperatures have allowed retailers to recover from missed winter sales, and were the inspiration for brighter colors, a fad which many analysts predict will stay for years.

Barbara Kahn, director of Wharton's School's Jay H. Baker Retailing Center, says people are excited that color is back because it symbolizes happiness. Kahn said in an interview with MarketWatch: “The fashion merchandise seems to be hitting the right note. There's a reason to buy.”

A National Retail Federation survey revealed that Easter, the third-largest spending holiday, is expected to increase spending by 11%. Target and Ross have already improved their earnings estimates for the first quarter, despite the slump in promotions and discounts.

Target's CEO Gregg Steinhafel believes April sales are likely to slump to the low-to-mid single digits, with many retailers thinking a later calendar date for Mother's Day may put a strain on April sales.

However, the International Council of Shopping Centers' Chief Economist Michael Niemira expects April same-store sales to rise 3% to 4%.

Key Statistics – US Retail Industry (source: MarketLine)

  • In the five years leading to 2016, the US apparel industry is expected to grow at a compounded annual growth rate exceeding 3%, improving the industry value to $383 billion.
  • Women's apparel was the most profitable last year, with total revenues exceeding $170 billion, a figure over half of the industry's overall value.
  • The industry's total revenue in 2011 was over $329 billion, with a CAGR of 2.7% from 2007 until 2011.

By Nicole Manuel for
Nicole Manuel is a freelance economics, finance and blog writer with a degree in economics and over two years of experience.

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