NRF lowers 2015 retail sales forecast
WASHINGTON, D.C. — The National Retail Federation revised its full year retail sales forecast ahead of second-quarter earnings announcements from major retailers next month.
The National Retail Federation lowered its 2015 retail sales forecast to a 3.5% growth rate from a 4.1% growth projection due to slower than expected 2.9% sales growth during the first half of the year. The trade group expects retail sales growth will accelerate to 3.7% during the back half of the year, but that’s not sufficient for the industry to achieve the original 4.1% growth projection shared back in February.
NRF president and CEO Matthew Shay and NRF chief economist Jack Kleinhenz offered numerous reasons for the revision.
“For years consumer spending has been hampered by lackluster growth in our economy. Much of that blame can be shifted to Washington where too much time has been spent crafting rules and regulations that almost guarantee negative consequences for consumers and American businesses alike,” Shay said. “Until the government and our elected leaders get serious about enacting policies that lift consumer confidence, create economic growth and spur investment, we will continue this trend of solid, but not exceptional, performance in the economy.”
“A confluence of events, including treacherous weather throughout the United States through most of the winter, issues at the West Coast ports, a stronger U.S. dollar, weak foreign growth and declines in energy sector investments all significantly and negatively impacted retail sales so far this year, and thus have changed how future sales will shape up for the rest of 2015,” Kleinhenz said. “Additionally, household spending patterns appear to have shifted purchases toward services and away from goods, though this may be transitory. Additionally, a deflationary retail environment has been especially challenging for retailers’ bottom lines.”
Shay went on to express optimism that consumer spending during the second half of the year will benefit from recent improvements in the housing and labor markets along with reduced energy costs.
Kleinhenz and Shay alluded to some of the headwinds facing the industry when NRF shared its forecast back in February, but the negative factors were seen abating while assumptions about other positive factors gaining momentum and prompted the rosy 4.1% growth forecast, which would have been the strongest growth rate since 2011.
At the time, Shay said, “while our outlook for the year ahead is positive, we aren’t quite out of the woods; in order to see continued momentum, we need a commitment from our leaders in Washington to pass legislation that will encourage investment, create jobs and set us on the path toward sustained, long-term economic growth.”
Kleinhenz recognized that Americans were benefiting from a pickup in wages and jobs and gains in the U.S. stock market, but also hedged his bets.
“We still, however, have a ways to go in order to achieve sustainable economic growth. There are a few wild cards that the retailers will need to keep an eye on, like global economic growth, energy prices and even inflation,” Kleinhenz said.
The recent cut to the full year forecast comes one week after NRF released a negative forecast for the back-to-school and back-to-college season that was based on a survey of consumers’ spending intentions. Average household spending for K-12 was projected to total $630 this year, down from $669 last year, while average household spending for college kids was seen dropping to $899 from $916 with the total market size pegged at $68 billion.