Itaú BBA - Retail sales increased 2.0% in 2017

Macro Brazil

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Retail sales increased 2.0% in 2017

febrero 9, 2018

Sales decline 1.5% in December

Core retail sales fell 1.5% mom/sa in December, disappointing the median of market expectations (-0.4%) and our estimate (-0.3%). In 2017, the indicator advanced 2.0% vs. 2016.

Broad retail sales (including vehicles and construction material) declined 0.8% during the month, slightly better than the median of market expectations (-0.9%), but below our call (-0.3%).

Weakness was widespread across segments in December, but those more influenced by store promotions (furniture and appliances; personal items) were particularly relevant, reinforcing the importance of the Black Friday event in explaining the result.

For the time being, we forecast a gain of 0.5% mom/sa in core retail sales in January.

Sales decline in December

Core retail sales dropped 1.5% mom/sa in December, disappointing the median of market expectations (-0.4%) and our estimate (-0.3%). Compared to December 2016, core sales expanded 3.2%. The November reading was revised upward by 0.1pp.

Broad retail sales receded 0.8% during the month, slightly better than the median of market expectations (-0.9%), but below our call (-0.3%). Compared to December 2016, broad retail sales climbed 6.4%.

In 2017, core retail sales expanded 2.0% vs. 2016, while broad retail sales grew 4.0%. Notwithstanding the annual reading, sales slowed down in recent months on a seasonally-adjusted quarterly basis (see chart on the right).

Breakdown shows material negative contributions from segments influenced by Black Friday

The seasonally-adjusted monthly slide in broad retail sales was broad-based, as eight out of ten components posted lower results in December.

Among core retail components, those more influenced by Black Friday promotions stood out: sales of furniture and appliances fell 2.7%, while sales of other items for personal and domestic use retreated 6.3%, after posting significant gains in November. These readings reinforce the perceived extent of the event’s influence on monthly results: consumers did their Christmas shopping earlier to take advantage of lower prices. Pharmaceuticals (not so influenced by promotions) grew the most, by 1.2%.

Sales of construction material by retailers (associated with small construction works) were also noteworthy, with a 1.7% drop during the month. Despite the monthly decline, the indicator advanced 9.1% yoy.

Coincident indicators suggest modest increase in retail sales in January

Coincident indicators out so far (vehicle sales, surveys with consumers and retail entrepreneurs) suggest that core retail sales advanced 0.5% mom/sa in January.

 

Artur Manoel Passos
Alexandre Gomes da Cunha



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