Retail Sales Ticked Up in January, but Department Store Sales Are Shrinking

After a disappointing December, U.S. retail sales gained momentum again at the beginning of the year, signaling a stronger position for the industry going into 2019.

According to data released Monday by the Commerce Department, January retail sales reached $504.4 billion on a seasonally adjusted basis, a 0.2 percent increase over the month prior. Excluding spending on motor vehicles and at gas stations — businesses that have been affected by rising gas prices — sales increased 1.2 percent from December, the largest monthly gain since May 2018.

Since January 2018, spending on categories excluding motor vehicle-related sales has increased a robust 3.7 percent, with the biggest gains concentrated in building materials stores, restaurants, grocery stores and non-store retailers. The latter industry, which includes e-commerce retailers such as Amazon, saw a 7.3 percent increase in spending over the same month last year.

Clothing and accessories stores saw more modest results, with January sales reaching $22.6 billion, a 1.6 percent increase over the year prior though a 1.3 percent drop from December.

Department stores — many of which have struggled to adapt to changing consumer preferences and the rise of e-commerce — have been largely excluded from the benefits of the strong economy: Sales have fallen 3 percent since January 2018 and remained mostly flat during the first month of the year. Some of this may be due to store closures: Sears shuttered almost 150 locations at the end of the year, with another 120 on the chopping block before the end of March.

As of last week, U.S. retailers had announced 4,810 store closures in 2019, according to retail and technology advisory Coresight Research, more than double the number announced during the same period last year.

January’s report gave investors some hope, however, after December’s 1.2 percent decline (since revised even lower to 1.6 percent) battered the markets last month. On Monday, the S&P 500 was up 0.8 percent as of 10:30 a.m. EST, while the SPDR S&P Retail ETF XRT rose 0.7 percent.

The National Retail Federation forecasts overall sales growth of between 3.8 and 4.4 percent during 2019, for a total of about $3.8 trillion.

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