Online shopping fuels surge in March US retail sales; 2 new bankruptcies

US retail sales eclipsed expectations in March as consumers spent big online and at a wealth of other stores.

Retail and food services sales rose 0.7% over February totals, according to US Census Bureau data released April 15. This exceeded the more subdued increase of 0.4% economists had anticipated for the month, according to data published by Econoday.

The median default risk across retail categories rose slightly between mid-March and mid-April, with two retailers filing for bankruptcy.

Retail sales

US retail and food sales grew to $709.59 billion in March, up from a revised $704.53 billion for February and 4% above March 2023.

Nonstore retail, which includes online shopping, saw the biggest sales boost in March with 2.7% growth from February and 11.3% higher sales than the previous March. Sales at gas stations and miscellaneous store retailers, such as pet stores and second-hand stores, grew by 2.1% in each category

Consumers pulled back their spending the most at sporting goods, musical instrument and book stores, and at clothing retailers in March compared to a month earlier, with 1.8% and 1.6% lower sales figures for the two retail categories, respectively. The former category has contended with an enduring decline in sales as consumers increasingly shift their spending away from discretionary items, with sales down 3.9% on an annual basis.

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Compared to the year-ago period, sales in the first quarter were the weakest among furniture and home furnishing stores, with 9.6% lower sales, followed by building material and garden equipment retailers and department stores with contractions of 4.9% and 4.3%, respectively.

Bankruptcies

Arts and crafts company JOANN Inc. and Number Holdings Inc., the parent company of 99 Cents Only Stores LLC, sought bankruptcy protection during the month ended April 16.

With over 800 store locations across the US, JOANN plans to implement a financial restructuring process that includes reducing its debt by approximately $505 million.

Discount retailer 99 Cents Only Stores — operating 371 stores in California, Texas, Arizona and Nevada — is pursuing a sale of its existing merchandise and real estate assets. The "unprecedented impact of the COVID-19 pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds" all negatively affected the company's operations, according to a company statement.

Default risk

The median default risk for all retail categories increased slightly to 2.2% in mid-April from 2.1% in mid-March as most sectors' default risk grew over the monthlong period.

Household appliance retailers' risk of default surged to 8.1% from 5.7%, putting the sector at the top of the list ahead of drug retail and computer and electronics retail.

The personal care products sector saw the greatest drop in default risk, falling to 3.6% in mid-April from 4.6%.

Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.