Throughout March, abnormally cold weather — rather than tough economic headwinds — kept consumer spending lower than it was last year. However, with Easter falling on the last day of the month, both the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index and Redbook’s weekly measure of sales at chain stores, discounters, and department stores showed hefty gains as Americans prepared for the holiday.
Up from the previous week-over-week decline of 1.7 percent, the ICSC-Goldman Store Sales Index jumped 4.7 percent. On a yearly basis, the barometer of retail sales increased 1.9 percent, up from the previous week’s 1 percent gain. The Redbook reading — in which figures for the first week of the month are compared with the average for the entire previous month — showed a gain of 3.5 percent, building on the 2.6 percent gain recorded the week before.
“Despite the abnormally cold weather throughout the eastern United States–which certainly negatively affected the strength of Easter apparel demand–Easter sales combined with some pent-up demand from the prior week drove sales up sharply on a week-over-week basis,” said ICSC Chief Economist Michael Niemira in a press release seen by Dow Jones Newswires…
As the numbers so clearly show, consumers’ spending activity changed significantly in the last week of March. Typically, abnormally cold weather lowers consumer demand for spring goods and apparel, and as Planalytics senior vice president Evan Gold told CNBC, March was “trending the coldest since 1996 in the U.S.” As a result of this weather pattern, consumers were shopping very differently in the weeks leading up to Easter from how they were a year ago, he added. Demand fell for clothing items like summer dresses and sunglasses and for lawn and garden items in recent weeks, delaying the most profitable season for home improvement stores like Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW).
That pattern — which was alleviated last week by demand for Easter supplies — reversed an earlier trend. Stifel Nicolaus analyst Richard Jaffe told the publication that the retail apparel sector has benefited from warm weather over the past few years in March, but this season, colder temperatures created challenges for selling spring items. The resulting lower demand may contribute to overstocking, increased markdowns, and smaller margins for retailers this year, Jaffee added.
But, despite Jaffe’s warning, ICSC expects March retail sales, excluding drug stores, to increase by 4.5 percent to 5.5 percent, good news for the United States’ gross domestic product as consumer spending accounts for more than two-thirds of the economy.