Stocks slump amid weak holiday retail sales figures
Report raises fears of consumer spending, economy declining
Retail sales at the end of 2018 suffered the steepest decline in nearly a decade, roiling the stock market Thursday and fueling fears of an economic slowdown.
The Commerce Department on Thursday estimated retail and food sales in December totaled $505.8 billion, up 2.3 percent from the same time last year but down 1.2 percent from November, the largest month-over-month decline since September 2009. Sales fell in every category except auto dealers and home supply stores.
“It was surprising because this year was expected to be the biggest holiday retail season,” said Venky Shankar, research director of Texas A&M University’s Center for Retailing Studies. “It was a disappointment.”
Stocks slumped Thursday following the retail report, which raised fears of weakening consumer spending in the world’s largest economy. The Dow Jones Industrial Average fell more than 100 points, or 0.4 percent, and the S&P 500 fell more than 7
points, or nearly 0.3 percent.
December’s sales report, delayed by the partial federal government shutdown, capped a lackluster holiday season that fell below expectations despite steady job growth and low unemployment. A volatile stock market, the government shutdown and ongoing trade dispute with China could have impacted consumer confidence, industry leaders said.
Holiday retail sales, excluding automotive, gas and restaurant spending, totaled $707.5 billion, an increase of 2.9 percent from the previous season, according to the National Retail Federation. The Washington, D.C.-based retail association had forecast in-store and online retail sales of as much as $720.9 billion in the last two months of the year, an anticipated increase of 4.8 percent from the 2017 holiday season.
“All signs during the holidays seemed to show that consumers remained confident about the economy,” National Retail Federation President Matthew Shay said in a statement. “However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected.”
E-commerce wasn’t spared from the slowdown. Online retailers posted $678.8 million in sales in December, up 3.7 percent from the previous year but down 3.9 percent from November, the largest month-over-month decline since November 2008.
“The decline in internet sales can’t be due to the weather,” Shankar, the Texas A&M professor, said. “It has to be people holding back their purse strings.”
Most of Houston’s publicly-traded retailers, such as Francesca’s and Men’s Wearhouse, have yet to report holiday season sales figures. Privately-held retailer Academy Sports + Outdoors declined to comment on sales. Charming Charlie’s did not return a call for comment.
Group 1 Automotive, the nation’s third-largest automotive dealership group, sold a record number of vehicles in 2018, up 5.4 percent from the previous year, but reported a 16 percent decline in new car sales during its fourth quarter ended Dec. 31. The company attributed the drop to the prior year’s surge in replacement vehicle sales after Hurricane Harvey.
Shankar said it’s too early to tell whether December’s disappointing retail sales is indicative of where the local and national economy is heading.
“We have to watch how consumer confidence is this quarter and next,” he said.
Muzaffer Savukduran isn’t planning to wait and see. The owner of Woven Arts plans to shutter his Oriental rug and home decor store in Rice Village at the end of April after sales during the holiday season fell 30 percent from last year.
Savukduran blamed the growing popularity of online sales eating into brickand-mortar sales, rising rents and newly-installed parking meters at Rice Village for his store’s impending closure. After closing shop in Rice Village after six years, Savukduran hopes to reopen in Montrose.
“The holiday season was very low,” Savukduran said. “Retailers are not doing good, it’s not only us. We’re closing in two months. It’s that bad.”