Yahoo Finance US Department Store Sales Rose in March
The Changing Face of the US Department Stores Industry (Part 1 of 3)
March department store sales
According to the US monthly retail trade report issued on April 14, 2015, department store sales (excluding leased departments) saw a 1.4% month-over-month increase to $13.9 billion in March. However, sales declined by 1.1% on a year-over-year basis.
Overall, seasonally adjusted US retail sales totaled $441.4 billion in March 2015. This was an increase of 0.9% compared to February 2015 and an increase of 1.3% compared to March 2014.
Weakness in department store sales
As indicated in the graph above, US department store sales have been falling for the past few years. Excluding licensed departments, US department store sales as a percentage of total US retail sales were 3.1% in March 2015, down from 4.5% in March 2010 and ~7.0% in March 2000.
The emergence of e-commerce retailers like Amazon (AMZN) has impacted the traditional brick-and-mortar department store model. The popularity of off-price and discount retailers like TJX Companies (TJX) and Target (TGT) keeps growing because consumers are still looking for bargains despite considerable improvement in the economy. This affects department stores like Macy’s (M) and Kohl’s (KSS). The SPDR S&P Retail ETF (XRT) allocates 6.3% of its portfolio holdings to department stores.
Sales at Kohl’s have been declining for the past two fiscal years. Sears (SHLD) is in some real trouble and hasn’t posted a year of sales growth since fiscal 2008. After struggling for a long time, JCPenney (JCP) finally reported 3.4% sales growth in the fiscal year ended January 31, 2015.
Meanwhile, off-price retailers like TJX Companies have been able to outperform department stores. This has led stores like Macy’s to contemplate the idea of entering the off-price space.
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