The Big Picture
Although U.S. economic growth for the first quarter was revised downward, from 1.6% to 1.3%, recent jobs numbers indicate that the economy is still running at a good clip. Some 272,000 jobs were created last month, beating expectations.
Overall retail sales took a dip in May, however, with sales growth coming in at just 0.1%, after a 0.2% decrease in April.
These mixed results will make it harder for the Fed to determine the extent of possible interest rate cuts later this year, especially given that the upcoming election creates more uncertainty.
May Sales
Among our client stores the sales momentum has finally started to slow, with severe weather in the South and Midwest keeping customers indoors. Menswear posted a 3% drop overall while women’s fell 5% against last year.
In men’s, both Clothing and Sportswear categories were down. Suits fell by 6% in May and Sport Coat sales were flat. Suits and jackets have been leading menswear for several seasons, so this represents a significant shift in buyer behavior. Sportswear also fell by 2% against last year.
Women’s Dresses, which finally saw a pickup in recent weeks, fell by 12% against last year.
Right now it is too soon to tell if this slowdown is part of a larger trend, or purely circumstantial given the severe weather. There’s nothing in the economy to indicate that consumers are putting on the brakes.
Spring Review
We are coming off of three to four months of a very good spring/summer season, so our advice is to review what worked this year so you can emulate it for next spring. Which vendors and classes were pushing business in your store?
Many merchants have just returned from their pre-spring market, so make a plan while it’s fresh in your thoughts.
Blacks’ Bottom Line
Despite the May dip, our 90-day trends are up 2% overall, indicating that the market is still firm. Investigate what worked this spring, and where you need to adjust for next year.