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May 5, 2010
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Momentum stalls in April clothing sales

By
Reuters
Published
May 5, 2010

SAN FRANCISCO (Reuters) - Electronics and luxury items were the fastest-growing U.S. sales categories in the retail sector in April, but weakness in apparel suggests that a sustained recovery in overall retail may be too soon to call, according to a report released on Tuesday 4 May.

Momentum

"What we saw in April was generally a mixed bag of results, especially compared to the generally strong results in March," said Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, which estimates total retail sales across all payment forms.

While high-profile gadgets like Apple Inc's (AAPL.O) iPad helped consumer electronics sales to a 9.7 percent rise in April -- up from 4.5 percent in March and a 6.9 percent decline a year earlier -- clothing sales didn't see the same increase.

Women's clothing sales fell 4.1 percent in April, compared to a rise of 4.2 percent in March, SpendingPulse said. The overall U.S. specialty apparel category fell 3.9 percent.

Some of that decline is due to an earlier Easter, meaning many pre-holiday sales were logged in March rather than April.

"Still, we saw a little more softness than I think we expected on the apparel side," said Berry. "If you combine March and April we're basically flat year over year, which is slightly disappointing."

Car sales spurred by dealer incentives may have stolen sales from apparel, Berry said, noting that the first financing payments for vehicles purchased earlier this year may have come due in April.

Analysts, on average, expect April same-store sales to rise 1.6 percent, with a 5.4 percent gain for the combined March and April period, according to Thomson Reuters data.

MasterCard Advisors' SpendingPulse bases its data on aggregated sales activity in the Mastercard payments network, together with estimates for payment forms like cash and check.

ARE WE BACK?

Luxury retail sales logged their third straight month of double-digit growth during April, according to SpendingPulse. Excluding jewelry, those sales rose 15.5 percent, versus 22.7 percent growth in March and 22.7 percent in February.

The mixed results from the range of categories points to lingering consumer caution that has kept most retail sales still shy of 2008 levels.

"Have we bounced off the bottom? Yes, we've definitely bounced off the bottom -- but are we back? In most segments the answer is no," said Berry.

Since the 2009 holiday season, when consumers opened their wallets to spend after a long period of austerity brought on by the recession, retailers have been trying to see if that spending will continue.

"What we saw in March was the beginnings of the indications that that was indeed happening," said Berry. "But with these April results, that has tempered the enthusiasm a little bit, although some was due to the calendar shift."

The focus will now move to May, but that low-spending month is dominated by home improvement projects and the start of the summer family travel season.

MasterCard Advisors is the professional services arm of MasterCard Worldwide. (Reporting by Alexandria Sage; Editing by Bernard Orr)

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