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May retail market: Retail sales dip, pace of bankruptcies holds steady

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May retail market: Retail sales dip, pace of bankruptcies holds steady

U.S. retail sales dipped in April and two retailers filed for bankruptcy during the late April through early May period, keeping pace with the number of bankruptcies the previous month, according to an analysis by S&P Global Market Intelligence.

Retail sales

U.S. retail and food services sales dropped 0.2% on a seasonally adjusted basis to $513.36 billion in April from the previous month, according to a report released May 15 by the U.S. Census Bureau.

The bureau revised its retail and food services sales estimate for March to $514.33 billion from $514.06 billion.

James Bohnaker, associate director at IHS Markit, noted that sales have slowed down from where they were in the middle part of 2018. He said he expects a pickup in the consumer and retail sectors "given how solid the consumer fundamentals are in terms of [the] tight labor market, with pretty good job growth and improving wage growth." Still, he cautioned that higher tariffs on Chinese imports could slow things down.

National Retail Federation Chief Economist Jack Kleinhenz said slower tax refunds and weather factors, including flooding in the middle of the country and blizzards, may have played key roles in April's numbers.

"Despite there being a lot of volatility in the data from month to month, the long-term comparisons look good and the three-month average in particular is getting stronger," he said in a May 15 statement.

Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a research note that the April figures "are a bit of a downer for the near-term economic outlook but do not move the big picture needle much, especially since the seesaw pattern in place, if it persists, would imply a powerful bounceback in May."

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Building material and garden equipment and supplies dealers registered a month-over-month sales decline of 1.9%. Sales in the subsector were about $32.37 billion for December.

Electronics and appliance stores also registered a sales decline of 1.3% to $7.96 billion, while motor vehicle and parts dealers recorded a 1.1% dip in retail sales to $104.30 billion.

Nonstore retailers, a category that includes e-commerce companies, posted a 0.2% decrease, with sales totaling $60.71 billion.

Sales at clothing and clothing accessories stores also dropped by 0.2% to $22.83 billion.

Meanwhile, general merchandise stores posted a 0.2% increase, with sales totaling $60.3 billion.

Consumer prices increased 0.3% in April from March, according to a monthly report released May 10 by the U.S. Bureau of Labor Statistics.

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Prices increased 2% year over year. Apparel prices decreased by 0.8% month over month in April, with apparel for men and boys declining 2.1%.

Footwear prices declined by 1.6%, while prices of jewelry and watches rose 1.5% during the period.


Two Market Intelligence-covered U.S. retail companies filed for bankruptcy in late April and early May. The filings bring the bankruptcy count in 2019 to 15.

The bankruptcy count includes companies with a primary industry classification of retailing, household and personal products, or consumer durables and apparel, and secondary classification of retailing.

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A group of creditors, including KP Building Products Inc. (USA), KP Building Products Ltd. (Canada), Style Crest Inc., Carlisle Coatings & Waterproofing Inc. and Carlisle Construction Materials LLC, filed an involuntary petition for liquidation under Chapter 7 against WBP Liquidation Co. Inc. on April 17. The total claim amount of the petitioning creditors was $620,000.

Sure Winner Foods Inc., a distributor of frozen foods in Maine, New York and Philadelphia, voluntarily filed for Chapter 11 bankruptcy protection May 7. The debtor listed both its assets and liabilities in the range of $10 million to $50 million.


The retail sector lost 12,000 jobs in April, down to 15.8 million jobs. That is a decrease of 0.08% from March, according to a May 3 monthly report from the U.S. Bureau of Labor Statistics.

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Sporting goods, hobby, books and music stores lost 5,300 jobs, or 0.94%, to a total of 558,700 jobs in April. Clothing and clothing accessories stores shed 6,600 jobs, a month-over-month decrease of 0.49% to 1.34 million.

Meanwhile, employment at motor vehicle and parts dealers rose by 7,500 jobs, a 0.37% increase to 2.1 million jobs. Gasoline stations added 2,600 jobs, or 0.27%, in April to 948,200.

IHS Markit's Bohnaker said retail is not going to be the strongest sector in terms of employment growth since a lot of retailers are closing down, whether it is due to bankruptcy or just general transformation within the industry itself.

"I think you could see small job losses over the course of the year or neutral probably at best,” he said.


A May analysis of the one-year probability of default scores identified 15 U.S. department stores and apparel companies with scores ranging from 11.1% to 1.9% and corresponding implied credit scores of "ccc+" to "bb-."

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Christopher & Banks Corp. continued to top the list with a probability of default of 11.1%.

Maternity apparel retailer Destination Maternity Corp., which holds the No. 2 spot, saw its probability of default decrease to 8.8% from 9.9% in April.

Specialty retailer Francesca's Holdings Corp. saw its probability-of-default rise to 5.4% from 4.3% as it took over Stein Mart Inc.'s former spot on the list.

Meanwhile, RTW Retailwinds Inc. saw its probability-of-default score rise to 3.6% from 3.3%.

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S&P Global's Fundamental Probability of Default Model provides a fundamentals-based view of credit risk for corporations by assessing both business risk — including country risk, industry risk, macroeconomic risk, company competitiveness and company management — as well as financial risk, such as liquidity, profitability, efficiency, debt service capacity and leverage. For a more thorough review of the model, see the PD Model Fundamentals - Public Corporates whitepaper.