RetailSails

The U.S. Department of Commerce released March retail sales this morning, reporting that sales rose an adjusted 1.6% from February and surged 10.0% (unadjusted) from the year-ago period, the largest year-over-year increase since March 2000. This was the fifth consecutive gain after 15 straight monthly declines:

However, the extremely strong gains are deceiving as results are being compared to very depressed levels from a year ago, when overall sales tumbled 8.4%, 11.6%, and 10.6% in January, February, and March respectively. In addition, much warmer and drier weather after a dismal February, as well as Easter falling a week earlier this year certainly played a part in this month’s strength.

Total sales for the month were still down 1.6% from both March 2008 and 2007. Year-to-date, total sales are 5.8% higher than last year, but still down 5.0% and 1.7% from 2008 and 2007 respectively. To put in perspective how absolutely dismal 2009 was, consider that in the previous 15+ years, from January 1993 through August 2008, there were a total of only 3 months in which YoY decreases were reported:

For the month, Auto & Parts Dealers (+18.1% YoY / +6.7% MoM), Online & Catalog retailers (+14.8% YoY / +0.2% MoM), and Clothing & Accessories Stores (+9.9% YoY / +2.3% MoM) were among the strongest gainers. Total sales excluding Autos were up 8.3% from last year, while total sales less Autos and Gas Stations showed a 6.2% year-on-year gain. Stores which are highly leveraged to the housing market, including Furniture & Home Furnishings Stores (+6.5% YoY) and Building Materials & Supplies Dealers (+3.3% YoY) have finally started to show signs of stabilization after struggling for more than two years.

Another positive sign is the return of discretionary spending at Department and Electronic Stores. Sales at Department Stores posted its second straight gain, increasing 5.2% from last March after 29 consecutive monthly declines, while sales at Electronic and Appliance stores (+4.9%) rose for the first time in 19 months, though year-to-date sales are still down 1.1% from 2009.

The National Retail Federation’s measure of retail sales, which excludes autos, gas and restaurants, showed a 0.9% monthly gain and rose an unadjusted 5.7% from last March. “It’s evident consumers were feeling much better about the economy and their finances last month,” said Rosalind Wells, Chief Economist for NRF. “Pent up demand combined with an early Easter and warm Spring weather significantly boosted consumers’ moods and retail sales.”

Because the early Easter pulled sales into March from April last year, the combined March-April period will be a much better barometer of performance. Going forward, we expect continued year-over-year gains after sharp the declines in 2009. Consumer confidence has risen along with the financial markets, but elevated unemployment and a depressed housing market will continue to weigh heavily on the consumer mindset.

Click here for detailed tables and graphs by line of business.