Were January Retail Sales Overstated or Is My Tinfoil Hat on Too Tight?

I flat out do not believe the numbers that the Census Bureau reported for January retail sales. Based on conversations with retailers, the nasty weather crushed sales during January. I will bet dollars to donuts that future updates to retail sales reports will feature significant downward revisions. In particular, I find the reported clothing and clothing accessories sales to be outside the realm of believability.

Am I crazy to think that anecdotal reports from a handful of apparel retailers are more reliable than the U.S. Census bureau? Maybe.  But do your own due diligence. Go into any apparel retailer, other than the limited segment that sells cold weather gear, and ask them how their January results compared to previous year. It is highly likely that you will hear the January sales were off by a huge percentage. Thus, I declare that the claim that retail sales in general and clothing sales specifically were up in January to be highly suspect.

According to the Census Bureau, the "advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $427.8 billion, a decrease of 0.4 percent (±0.5%)* from the previous month, but 2.6 percent (±0.9%) above January 2013".  The report also indicated that sales of clothing and clothing accessories increased to $20,985 million dollars from $20,742 in 2013.

Check out this article on US Retailers' January 2014 Sales Roundup. There is a huge difference between same store sales and net sales. While the primary reason for the discrepancy between net sales and comparable store sales is due to January 2014 being treated by many retailers as a 4 week month and January 2013 sales being a 5 week month, the net sales number certainly appear abysmal. Given the timing differences and the impact of store openings and closings, net sales in most cases would not be as reliable an indicator as same store comparable sales. However, given the 20% (1 week reduction) shorter period measured, the number of retailers that reported declines of greater than 20% in net sales seems somewhat suspicious.

It will soon become apparent whether my tin foil hat is on too tightly. February retail sales are due to be reported on March 13, 2014 at 8:30 am. I will be highly surprised if this report does not include a downward revision to the January advance report.