Fashion Sales Slip Even as Retail Moves Higher Overall
The Census Bureau's monthly reading of sales showed a mixed bag.
Retail inched ahead last month, even as fashion stores slipped behind, according to the Census Bureau's latest reading on industry sales.
April retail and food services sales rose
1.6 percent from a year earlier as consumers overcame persistent inflation, a bank crisis and renewed worries about a recession.
But apparel and accessories speciality stores sales slipped 2.3 percent for the month, while department stores were off 1.4 percent.
For the retail fiscal first quarter — which includes February, March and April — fashion specialty stores were down 0.4 percent while department stores managed a 0.6 percent increase.
Those figures reflect sales in stores. Nonstore retailers, a category dominated by e-commerce, saw sales increase 8 percent for the month as well as the quarter — putting digital sales out in front even if the go-go days of pandemic-buying online have passed.
The modest sales report put investors on guard on Wall Street, where the Dow Jones Industrial Average fell 1 percent, or 336.46 points, to 33,012.14. Retail was among the sectors feeling the most pressure. The decliners included: Gap Inc., down 5.7 percent to $7.48; VF Corp, 4.9 percent to $20.60; Kohl's Corp., 4.9 percent to $19.42; Mytheresa, 4.3 percent to $3.82, and Nordstrom Inc., 3.7 percent to $14.50.
Matthew Shay, president and chief executive officer of the National Retail Federation, said consumers have proven to be resilient in the face of economic uncertainty.
“Moderating price levels, continued labor market strength and wage gains have increased consumers' ability to spend,” Shay said. “However, they remain cautious and concerned about the current economic environment. Retailers continue to provide competitive pricing and convenience to help cost-sensitive consumers stretch their budgets.”
It could become a problem if consumers are too resilient to inflation.
That's because the Federal Reserve has been ratcheting up interest rates for more than a year to cool off consumer demand and keep the economy — and prices — from overheating. But if the Fed keeps raising rates to keep inflation from becoming entrenched, the risks of a sharper recession increase.