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Retail Sales Take Hit in April
 

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May 9, 2005--Unseasonably cold weather, gas prices, interest rates, and an early Easter all conspired against retailers in April.

The latest Retail Sector Performance Index numbers, released Thursday by the National Retail Federation (NRF), indicate a slowdown from what had been a very busy March. The index dropped to 50.5, down 7.9 points from the previous month and 8.8 points below April 2004.

The monthly survey measures retail executives' evaluations of monthly sales, traffic, customer transactions, employment, inventories, and sales outlook. An index rating of 50 is considered normal.

The biggest drops were in the demand indices -- sales, customer traffic, and average transaction per customer -- down 16.9 points. The six-month sales outlook also fell significantly, dropping to 8.7 points.

Scott Krugman, a spokesman for the NRF, said that Easter falling in March was the primary reason for the slowdown. He expects a bounce this month thanks to Mother's Day.

"The operations side of it looks strong," said Krugman, referring to a slight jump in the sub-index that measures retail employment and inventories. "Retailers are poised to turn things around in May."

Though post-holiday malaise on the part of customers was more or less universal, smaller retailers were able to escape some of the negative effects of rising gas prices, which tend to hurt larger discounters more than niche market stores. Customers who frequent these smaller stores tend to be more affluent and are less affected by having to pay a bit more at the pump.

But small retailers have been feeling the burn of recent interest rate hikes, which have been steadily ticking up since last June. On Tuesday, the Fed announced another quarter point increase.

"Higher interest rates have an impact on everyone," said Krugman.

Last updated: May 9, 2005




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