US retail sales fell a surprising 0.1% in April from the previous month, according to seasonally adjusted data this week released by the US administration.

Excluding sales of motor vehicles which were boosted by huge discounts, total retail sales fell 0.9%.

Sales of clothing and clothing accessories stores were even down 3.2% from March, declining 0.9% from April 2002.

By comparison, they had increased by 3% in the previous month, from the levels reached in February 2003 and in the same month of last year.

Retailers reporting sales' drop

The sharp decline in apparel sales experienced in April was confirmed by nearly all major US retailers, including discounters.

Kohl's said total same-store sales fell 4.1% in April with comparable apparel sales finally down 3% in the first quarter ended on 3 May.

Even Target and Wal-Mart reported disappointing results for the period, as sales were lower than expected in the first three months of the year.

In April, retail apparel sales were depressed by unusually cold weather and war worries at the beginning of the month.

Easter recess did not help in boosting sales, in addition, while US victory in Iraq was not followed by a post-war purchasing euphoria.

Far from recovering, US economy continued slowing down in April with unemployment again increasing and lower industrial production.

Markdowns ahead

Although showing stronger confidence when interviewed, US consumers remained actually cautious while visiting stores with a preference for markdowns and discounts.
As a result of poor sales in the first quarter, US apparel retailers are now confronted with a high level of inventories and will be forced proposing additional discounts in the coming months.

Although sales may continue rising in volume terms, they would again fall in value terms as a consequence, negatively affecting retailers' profits.

Due to the recent fall of the US dollar, retailers no more benefit from lower import prices, in addition. According to the US Labor Department, apparel import prices rose in April to a 3-year record level.

Official index of import prices rose from 99.80 in May 2002 up to 101.10 in April 2003 (year 2000=100).

The sharpest rise was observed for knitted apparel while import prices of certain clothing for men and boys remained at a low level.

Although reducing retailers' margins, the dollar's fall is expected stimulating US economy by boosting exports, however, with a positive impact on US apparel consumption by the end of the year.