NRF cuts 2015 U.S. retail sales forecast after weak first half

The National Retail Federation, the biggest U.S. retail association, cut its forecast for retail sales growth in the country this year, citing an unexpected slowdown in growth in the first half of the year.

The NRF now expects U.S. retail sales to grow 3.5 percent in 2015, lower than the 4.1 percent growth it forecast in February. NRF said sales grew 2.9 percent during the first half of 2015 and are expected to grow 3.7 percent over the next five months.

" ... A deflationary retail environment has been especially challenging for retailers' bottom lines," NRF Chief Economist Jack Kleinhenz said in a statement.

Kleinhenz said the weak first half sales were due to bad weather through most of the winter, the West Coast ports disruptions and a stronger dollar among other factors.

Even recent government data points to weak sales. U.S. retail sales unexpectedly fell in June, recording the weakest since February, as households cut back on purchases, according to the latest data from the Commerce Department.

NRF Chief Executive Matthew Shay also blamed Washington for lackluster consumer spending. " ... Too much time has been spent crafting rules and regulations that almost guarantee negative consequences for consumers and American businesses alike."

Retailers across the board recorded sluggish sales in the first half of the year, with apparel retailers among the worst hit.

Wal-Mart Stores Inc, the world's largest retailer, said its customers were preferring to pocket savings from tax refunds and lower gas prices than spend.

Warehouse club operator Costco Wholesale Corp said gasoline price deflation ate into domestic sales, while department stores such as Macy's Inc and Kohl's Corp took a hit from unusual weather and port disruptions.

The stronger dollar through most of the year so far also hurt domestic sales. Macy's and Tiffany & Co said the strong dollar meant that tourists spent less.

However, home improvement giant Home Depot Inc capitalized on the storms and winter months with better-timed promotions that boosted sales and profit.

Households seemed to be spending more on services than on goods, Kleinhenz said.

NRF's calculations include general retail sales and non-store sales, and exclude automobiles, gas stations and restaurants.

The S&P 500 Consumer Discretionary Index, which includes auto parts makers and restaurants, had risen nearly 10 percent this year up to Tuesday's close.