MNI REALITY CHECK: US Apr Retail Sales Seen Weakest On Record

--Gas and Auto Sales To Drive Historic Dip In Sales As Virus Hits

By Brooke Migdon

     WASHINGTON (MNI) - U.S. retail sales will slide by a record amount in

April, as waning consumer confidence and stay-at-home orders keep vehicle and

gas station sales low and apparel stores remained closed, industry leaders told

MNI.

     Key points from their comments ahead of the May 15 report:

     **U.S. retail sales likely bottomed out in April, the first full month of

coronavirus business closures tied to the coronavirus, as stay-at-home orders

issued in March begin not expire Industry groups are looking for sales to

improve slightly in May.

     **Stockpiling of emergency supplies likely slowed in April as consumers

adjusted to shutdowns and anticipated state reopenings. Grocery store sales

remained strong.

     **Vehicle sales likely plummeted to the lowest level in modern history,

exceeding March's 25.6% drop.

     **Financial markets are expecting an 11.9% drop in sales for April

following March's 8.7% decline.

     JACK KLEINHENZ, CHIEF ECONOMIST AT THE NATIONAL RETAIL FEDERATION

     Plunging consumer confidence and massive cross-industry layoffs should keep

overall sales low, he told MNI.

     "It's just going to be a matter of how much demand was out there from a

consumer standpoint and do they have a willingness to spend given the

environment they're in," he said, noting that more than 30 million Americans

filed for unemployment benefits last month and the economy shed nearly 21

million jobs.

     Kleinhenz said grocery and food and beverage stores should continue to show

strength, though stockpiling that occurred through March slowed.

     But the former Cleveland Fed economist said Friday's numbers won't

accurately capture the full extent of virus damage because April marks the first

full month of shutdowns and data collectors likely struggled to get "reliable"

responses from shuttered businesses. The Census Bureau also likely struggled to

seasonally adjust the April figures because the demand shocks were so unusual,

he said.

     "When they're really exogenous shocks, they're not normal changes like a

holiday or a hurricane that they can factor in because of past data," he said.

     MICHELLE KREBS, ANALYST AT AUTOTRADER

     Vehicle sales fell to the lowest level in history in April, Krebs told MNI

in an interview. That should put significant pressure on headline sales.

     "It was a dreadful month," she said of April vehicle sales, adding that new

vehicle sales plummeted to the lowest monthly seasonally-adjusted annual rate in

records dating back to 1976.

     Krebs said sales likely hit rock bottom in April and should pick up in the

coming months, walking back a previous prediction that vehicle sales would

bottom out in May.

     "We saw sales picking up at the end of the month," she said, attributing

the increase to deals like longer-term 0% financing offered by Fiat Chrysler and

General Motors following the onset of the pandemic. Sales should continue on an

upswing as states and dealerships reopen, she said.

     PATRICK DE HAAN, HEAD OF PETROLEUM ANALYSIS AT GASBUDDY

     Gas station sales slid for a fourth straight month in April, he told MNI in

an interview.

     "Gasoline demand bottomed out about the first week in April, after falling

close to 50% from pre-coronavirus levels," he said. "Overall, demand is still

down most days anywhere from 30%-35% from pre-coronavirus levels."

     De Haan said demand began to recover following the expiration of many

states' stay-at-home orders in early May, and prices along with it. Gas station

owners are cautiously optimistic about May profits.

     "What was really ugly in terms of a fall in demand in March and April has

started to show signs of rebounding."

     GARY RAINES, CHIEF ECONOMIST AT FOOTWEAR DISTRIBUTORS AND RETAILERS OF

AMERICA

     Footwear sales were "absolutely decimated" by the coronavirus pandemic in

April as brick and mortar retailers across the country remained closed, Raines

told MNI in an interview. Footwear and apparel retailers are not considered

essential businesses under state and federal guidelines, so were unable to

operate in nearly every state.

     But online purchases skyrocketed in April, nearing a triple-digit

percentage increase from one year ago, he said, citing FDRA survey data. But

e-commerce accounts for only 10%-15% of total footwear sales.

     "It's just a fraction of brick and mortar," he said of online sales. "This

triple-digit surge still pales in comparison to the damage inflicted on brick

and mortar stores."

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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