US Retail Sales Decline for a Third Straight Month

Retail sales are a crucial growth driver for the economy. The US Census Bureau provides advance estimates of US retail and food (XLP) services sales on a monthly basis. The advance estimates are based on a subsample of 4,900 retail and food services firms.

The US retail and food services sales, adjusted for seasonal variation, fell by 0.6% in February 2015 to $437 billion, compared to January 2015. February was the third month in a row to witness a decline in retail sales. Retail trade sales fell by 0.8% and 0.9% in January 2015 and December 2014, on a month-over-month basis. The retail sales in February 2015 increased by 1.7% compared to the corresponding month last year.

Retail sales at electronics and appliance stores declined by 1.2% to $8.9 billion in February 2015 on a month-over-month basis, but were up 0.9% on a year-over-year basis. US retail sales at food and beverage stores were up 0.3% to $56.9 billion compared to the prior month and increased by 3.6% compared to the corresponding month last year.

Advance estimates provided by the US Census Bureau indicated a 1.4% decline in the retail sales of department stores for February 2015 to $13.6 billion compared to the prior month. The decline was 2.4% compared to the prior year. Sales growth at some of the department stores like Macy’s (M) has been sluggish in recent times. In fiscal 2014, Macy’s reported a 0.6% rise in its net sales. The company is facing tough competition from off-price retailers like TJX Companies (TJX), Ross Stores (ROST), as well as Nordstrom’s Rack stores (JWN).

Our Macy’s earnings overview and Nordstrom earnings overview series provide a discussion on their fiscal year 2014 performance.

Macy’s is a component of the Consumer Discretionary Select Sector SPDR Fund (XLY) and accounts for ~0.9% of this ETF. The iShares Russell 1000 Growth ETF (IWF) invests ~0.2% in Macy’s. Department stores as well as other retailers are also assessed on the basis of the same-store sales metrics.