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Coronavirus Hits Spending Activity: March Retail Sales Crash
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Consumer spending activity, which remains one of the pivotal factors driving the economy, has fallen drastically, thanks to the novel coronavirus–induced crisis. Notably, the outbreak has resulted in a complete shutdown of business activities and taken a toll on employment and household income. Consequently, people started shopping more of essential items rather making any discretionary purchases. People even started avoiding public places like restaurants, theaters and malls as social distancing became the norm of the day.
Due to this paradigm shift in consumers buying behavior, there has been a huge demand for grocery, packaged water, hand sanitizers, tissue paper, cleaning wipes, infant supplies and related staples. But this surge in demand is not enough to mitigate the losses the overall retail sector is bearing due to this rare catastrophe. March retail sales data shows steepest decline since 1992.
Industry experts see more pain ahead, given waning confidence and rising job losses. Market pundits have forecast a significant fall in U.S. GDP for April-June quarter. It’s no wonder that policy-makers are frantically working toward urgent repairs in order to halt economic meltdown. The Fed announced a massive quantitative easing program and slashed the benchmark interest rate to near zero. President Trump signed a $2-trillion stimulus package aimed at helping workers, small industries and distressed companies on the brink of bankruptcy.
Retail Sales Nosedived
The Commerce Department stated that U.S. retail and food services sales in March fell 8.7% to $483.1 billion, following a revised reading of 0.4% decline in February. We note that retail sales have fallen 6.2% from March 2019. The unprecedented fall in March sales portrays a sharp drop from the earlier record decline of 3.9% during economic recession in November 2008. Sales depressed across a range of categories but still there were certain groups that recorded decent numbers as consumers stocked up necessary items in the wake of coronavirus outbreak.
A Broader Picture
COVID-19 has crippled the global economy. Retailers have been severely impacted by this outbreak. In response to the pandemic, they are either shutting down stores or trimming work hours. Incidentally, several retailers have also chosen to call-off their guidance owing to difficulty in ascertaining the impact of the deadly virus on their performance. Moreover, some of the companies are even slashing pays and furloughing employees. Companies are also looking to cut non-payroll expenses significantly and curtail capital expenditure budget for the current financial year. To name a few, companies such as J. C. Penney , Macy’s (M - Free Report) , Nordstrom (JWN - Free Report) and Gap (GPS - Free Report) are reeling under the brunt of this pandemic.
On the contrary, there are companies that appear to be in a better shape, as consumers’ panic-buying trends amid the crisis spiked up the demand for essentials that have been flying off the shelves. Industry bellwethers such as Amazon (AMZN - Free Report) , Walmart (WMT - Free Report) and Dollar General (DG - Free Report) are even hiring to ensure swift customer service amid such challenging times.
Players in the industry are focusing on bolstering omni-channel operations and ramping up delivery services to meet customers’ needs who are spending more time at home to minimize the risk of infection. Recently, Tractor Supply Company (TSCO - Free Report) equipped itself to offer same-day delivery of its merchandise by expanding partnership with Roadie. Also, Sprouts Farmers Market (SFM - Free Report) unveiled its plan to expand its grocery pickup service with Instacart to all of its stores by early next month.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Coronavirus Hits Spending Activity: March Retail Sales Crash
Consumer spending activity, which remains one of the pivotal factors driving the economy, has fallen drastically, thanks to the novel coronavirus–induced crisis. Notably, the outbreak has resulted in a complete shutdown of business activities and taken a toll on employment and household income. Consequently, people started shopping more of essential items rather making any discretionary purchases. People even started avoiding public places like restaurants, theaters and malls as social distancing became the norm of the day.
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Due to this paradigm shift in consumers buying behavior, there has been a huge demand for grocery, packaged water, hand sanitizers, tissue paper, cleaning wipes, infant supplies and related staples. But this surge in demand is not enough to mitigate the losses the overall retail sector is bearing due to this rare catastrophe. March retail sales data shows steepest decline since 1992.
Industry experts see more pain ahead, given waning confidence and rising job losses. Market pundits have forecast a significant fall in U.S. GDP for April-June quarter. It’s no wonder that policy-makers are frantically working toward urgent repairs in order to halt economic meltdown. The Fed announced a massive quantitative easing program and slashed the benchmark interest rate to near zero. President Trump signed a $2-trillion stimulus package aimed at helping workers, small industries and distressed companies on the brink of bankruptcy.
Retail Sales Nosedived
The Commerce Department stated that U.S. retail and food services sales in March fell 8.7% to $483.1 billion, following a revised reading of 0.4% decline in February. We note that retail sales have fallen 6.2% from March 2019. The unprecedented fall in March sales portrays a sharp drop from the earlier record decline of 3.9% during economic recession in November 2008. Sales depressed across a range of categories but still there were certain groups that recorded decent numbers as consumers stocked up necessary items in the wake of coronavirus outbreak.
A Broader Picture
COVID-19 has crippled the global economy. Retailers have been severely impacted by this outbreak. In response to the pandemic, they are either shutting down stores or trimming work hours. Incidentally, several retailers have also chosen to call-off their guidance owing to difficulty in ascertaining the impact of the deadly virus on their performance. Moreover, some of the companies are even slashing pays and furloughing employees. Companies are also looking to cut non-payroll expenses significantly and curtail capital expenditure budget for the current financial year. To name a few, companies such as J. C. Penney , Macy’s (M - Free Report) , Nordstrom (JWN - Free Report) and Gap (GPS - Free Report) are reeling under the brunt of this pandemic.
On the contrary, there are companies that appear to be in a better shape, as consumers’ panic-buying trends amid the crisis spiked up the demand for essentials that have been flying off the shelves. Industry bellwethers such as Amazon (AMZN - Free Report) , Walmart (WMT - Free Report) and Dollar General (DG - Free Report) are even hiring to ensure swift customer service amid such challenging times.
Players in the industry are focusing on bolstering omni-channel operations and ramping up delivery services to meet customers’ needs who are spending more time at home to minimize the risk of infection. Recently, Tractor Supply Company (TSCO - Free Report) equipped itself to offer same-day delivery of its merchandise by expanding partnership with Roadie. Also, Sprouts Farmers Market (SFM - Free Report) unveiled its plan to expand its grocery pickup service with Instacart to all of its stores by early next month.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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