November's sluggish retail sales aren't worrying the industry yet

Dive Brief:

Retail sales rose 0.2% to $528 billion in November and were up 3.3% from a year ago, according to U.S. Commerce Department estimates.
With automobile dealers, gas stations and restaurants excluded, retail sales were up 0.1% for the month and 2.1% year over year, according to the National Retail Federation's analysis.
As Moody's Vice President Mickey Chadha noted in emailed comments, the industry's sales for the month fell below expectations and were "primarily due to lower department stores, sporting goods and health and personal care sales and comes on the heels of a strong 0.5% growth in October."

Dive Insight:

The sluggish retail sales stood in contrast to other generally positive economic data, but analysts aren't panicking about the numbers.

Chadha said that Moody's analysts "continue to expect that strong consumer confidence, wage growth, low unemployment and the strong macro-economic environment in the US will result in 2019 retail sales growth of over 3.5%."

He added that the analysts expect growth to be driven by "e-commerce players like Amazon; off-price retailers like TJX and Ross; value and convenience-oriented retailers like Dollar General and Dollar Tree; and discounters and warehouse clubs like Walmart and Target."

Instinet analyst Michael Baker noted that the late Thanksgiving holiday could account for some of the sluggish sales growth. "Either way, we are not overly concerned for retail sales, and we believe it will be a good holiday for retailers, much the same way that last year's reported December weakness did not indicate real issues with spending," Baker said in an emailed note.

Baker noted that apparel sales were "particularly soft, but likely most impacted by the [holiday] shift," and general merchandise sales were flat, with Target and Walmart taking market share. Chadha pointed out that the "laggards" in the month were department stores (sales down 7.2% year over year), clothing stores (down 3.3%) and electronics stores (down 1.5%).

NRF Chief Economist Jack Kleinhenz also attributed the decline to the calendar change. "Consumer spending has been solid, and there's still a lot of spending to be done," he said in a statement. "With strong employment and higher wages, we're on track for a strong holiday season."

He added that November's sales were up against strong 2018 numbers and that "next month could show a strong comparison" given last December's weak numbers.

An earlier report from NRF found that a record 189.6 million U.S. shoppers went to stores and retail websites during the five-day shopping weekend from Thanksgiving through Cyber Monday this year, up 14% over last year.