Retail Sales Slow in February as Payroll Tax Crimps Spending

Americans cut back on spending in February as cold weather and economic strain chilled their appetite for spring merchandise, retailers reported on Thursday.

The nation’s retailers said sales slowed in February, when most stores get rid of winter merchandise and bring in swimsuits, ankle-length pants and other spring fashions. Americans are dealing with a payroll-tax increase of two percentage points, income tax refunds that came later than usual and high gas prices. Widespread winter storms may also have made spring merchandise less appealing to them.

“February was a difficult month,” said Ken Perkins, president of Retail Metrics, a research firm. “Retailers faced significant headwinds.”

The numbers reflect a drop in sales growth from January. Over all, 14 retailers reported that revenue at stores open at least a year — an indicator of retail health — rose an average of 4.1 percent, according to the International Council of Shopping Centers, an industry trade group. That compares with increases of 5.1 percent in January and 6.7 percent last February.

But the latest results were affected by a drop in the number of stores reporting monthly sales, including the loss of big names like Target and Macy’s.

With the shrinking list, Costco, which posted a 6 percent gain in February, now accounts for about two-thirds of the tally. The retailers that report monthly data represent only about 6 percent of the $2.4 trillion in annual United States retail industry sales.

Among the companies that reported monthly results, the ones that cater to poor and middle-class shoppers said that Americans were still grappling with economic challenges. Many retailers resorted to steep discounts to attract shoppers.

“February sales reflect the continuing difficult economic environment,” said John Cato, chief executive of Cato, a women’s clothing chain. “We did see some beneficial impact from the delay in tax refunds from January.”

Limited Brands Inc., which operates Victoria’s Secret and has been on a winning streak, said that it had to discount more heavily than usual to bring in shoppers in February. Still, it reported a 3 percent increase in revenue, above the 2.6 percent rise analysts had expected.

Gap Inc., which started to gain momentum early last year, had a mixed performance. The retailer, which operates Gap, Old Navy and Banana Republic stores, posted a 3 percent increase, higher than the 2 percent gain analysts had projected. Revenue rose 2 percent at Gap and 6 percent at Old Navy, but sales at Banana Republic stores open at least a year fell 5 percent.

Article source: http://www.nytimes.com/2013/03/08/business/economy/retailers-report-sales-gains.html?partner=rss&emc=rss