US retail crisis nearing end

US retailers on Thursday reported increasing signs of steadying consumer demand, tentatively signaling the end to the steep year-on-year sales declines that have forced waves of store closures and cost-cutting since last September. Retail Metrics, which tracks the monthly figures, said its index of the monthly sales numbers showed a 2.3 per cent decline compared with the 4-5 per cent falls seen in recent months, the best performance for the index since September last year. Several retailers, including Gap and Target, delivered better than expected sales numbers, despite the absence of a boost from pre-Labour Day holiday sales.

Ken Perkins, head of Retail Metrics, said the numbers suggested the decline in US retail sales may have “bottomed out” in July when the index fell 4.7 per cent. Mid-price and discount retailers also reported anecdotal evidence of renewed interest in discretionary spending – such as strong television sales at Costco, the warehouse club; and stronger women’s clothing sales at JC Penney and Kohl’s, the department stores; and stronger accessory sales at Target, the mass discounter.

Mike Niemira, chief economist at the International Council of Shopping Centers, said he believed the monthly sales reports showed a shift in the fundamental mood, and “may indeed be the start of a recovery for the industry”. “I think there is a turning point of sorts that will only get better as we look ahead.”

Retailers’ year-on-year comparable sales figures will improve from September as they contrast with the sharp monthly declines seen after last year’s financial crash. However, overall sales volumes will remain at levels significantly below last year, and most retailers have cut back on inventories for the autumn and holiday seasons.

Luxury spending remains depressed. Neiman Marcus and Saks, the luxury department stores, again reported sales sharply down from last year, with comparable declines respectively of 16.6 and 19.6 per cent.

Image: Shopping at Gap