Privately held retailers are growing sales at an annual rate of less than 1 percent so far in 2013, the lowest annual rate since 2009, according to data from the financial information company Sageworks, indicating a slow holiday season ahead for many retailers.
The numbers confirm lackluster consumer sentiment readings and other predictions, indicating the likelihood that many retailers will be facing a weaker sales season than seen in previous years. The impact of a slower sales season could be significant to the economy and hiring, Sageworks noted. According to the National Retail Federation, holiday sales represented close to one-fourth of total retail industry sales last year.
“The apprehension U.S. consumers currently have about the economy couldn’t have come at a worse time for private retailers,” said Libby Bierman, an analyst at Sageworks. “These companies are sustaining rather than growing sales so far this year, and a holiday season boost would be tremendously helpful. These companies are showing slightly improved profit margins now, but if their rate of sales growth doesn’t increase, these margins could be difficult to sustain, impacting retailers’ hiring and investing practices in the future. Unfortunately, due to the combination of slowing sales growth and declining consumer confidence, it doesn’t look like the holiday season is going to be the solution U.S. retailers need.”
Sales growth for privately held retail companies has been virtually nonexistent so far in 2013, according to Sageworks. Such companies are growing sales at a rate of less than 1 percent, with slight profit margin improvement.
Smaller mom-and-pop retailers with annual sales less than $5M are seeing a 2 percent contraction in sales so far in 2013.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index for this month dropped to 72, the weakest since December 2011, from 73.2 in October, Sageworks noted.
[IMGCAP(1)]
