Early Spring Retail Report – March Sales Exceed Expectations

The Big Picture

The economy slowed in the first quarter this year, in part due to rising gas prices, which led to a drop in consumer spending.

The 1.8% gain posted for the first quarter comes after a revised 2.8% gain in the previous quarter, and was the slowest the U.S. economy grew since spring of 2010, during the European debt crisis.

But, despite the slowdown, retailers operating in the mid to luxury market continued to show significant growth over the first quarter of the year. Luxury merchants in particular are reporting strong numbers, indicating that the drop in consumer spending is isolated to lower income households. There are no indications yet that continued high gas prices would begin affecting consumers across the board.

March Gains
March retail sales among our merchants in a higher than expected, with women’s wear surging 13% and men’s wear posting a strong 9% gain. Luxury items drove sales.

In men’s, dress shirts were up 50%, neckwear grew by 31%, and sport coats posted a 23% gain, indicating a rebound in dressy apparel. Jackets also fared well with a 17% gain.

In women’s, special order climbed 83% over last March, while dresses kept up the momentum with a 32% gain.

(For more detailed trend numbers, and forecast for the next two seasons, see our Trends by Class page.)

Spring Outlook
Word from our merchants is that April started out slow, in part due to the calendar shift created by a late Easter. However, after the holiday, sales picked up and we expect the month to be softer than March but still positive.

That said, May looks to be a slow month and it’s important that retailers are proactive on taking markdowns. We realize that many of our specialty stores would prefer to hold out until after the majors have gone on sale, but if you see your business slowing you must step up and compete with comparable markdowns.

If you don’t, you could easily be stuck with old product that will keep you from driving sales of new, fresh deliveries.

Part of the problem you will face is that the spring product is just okay. There are no new trends driving sales. So it’s important that you flow new goods as soon as possible. If you don’t take markdowns when needed, you will not have the capital you need to purchase new product.

Blacks Bottom Line
This spring, you have to be proactive when it comes to taking markdowns. By May sales will slow and you need new product to keep you afloat.