A sluggish start in U.S. retail sales in the first half of the year has caused the National Retail Federation to turn back its year-over-year growth forecast to 3.6 percent from 4.1 percent for 2014 even though sales are expected to grow significantly faster over the next five months.
The remainder of the year includes retail's two biggest selling seasons -- Christmas and back-to-school shopping.
Some $3.2 trillion worth of goods -- excluding automobiles, purchases at gas stations and restaurant receipts -- are expected to be sold in stores, through catalogs and online in the U.S. this year, Kathy Grannis, senior director of media relations, said Wednesday after the retail federation's state-of-the-retail-industry report to media and other industry followers. Sales were $3.1 trillion in 2013 and and $3 trillion in 2012.
"We're not making news here today by acknowledging that the first half of the year was really tough and that it's caused everyone to think about their projections for the year," said National Retail Federation President and CEO Matthew Shay.
The federation's chief economist, Jack Kleinhenz, said sales are on track to grow 3.9 percent or more in the second half of the year, but one of the worst winters in recent history brought a lower-than-expected 2.9 percent climb for the first six months of 2014. The cause: Consumers continue to be modest spenders, he said
"They're cautious, they're selective, they're price sensitive," Kleinhenz said. "It raises issues on how fast this economy can grow." Interest rates will have to remain low to support consumer spending, he added.
Earlier this year, Wal-Mart Stores Inc. blamed the weather and other factors for lackluster sales in its fourth quarter of fiscal 2014, which ended Jan. 31. Net sales for the year were $473.1 billion, an increase of 1.6 percent over fiscal 2013. In October, the world's largest retailer projected a 3 percent to 5 percent net sales increase for fiscal 2015.
Wal-Mart executives didn't give much more insight into guidance, or future expectations, for the company's second quarter and fiscal 2015 results, which will be released Aug. 14.
Ongoing cost from increased participation by U.S. employees in Wal-Mart's benefits programs, a tax rate for the company of 32 percent to 34 percent and continued reductions in the Supplemental Nutrition Assistance Program should be factored into Wal-Mart's financial picture, at least in the short-term, said Charles Holley, executive vice president and chief financial officer for Wal-Mart.
"Despite these head winds, we remain cautiously optimistic about the second quarter and the balance of the year," Holley said when the past quarter's earnings were released.
Bill Simon, president and CEO of Wal-Mart U.S., sits on the board of the National Retail Federation.
During Wednesday's call, the group also discussed public-policy issues, such as sales-tax fairness, and other topics affecting merchants.
Business on 07/24/2014