Moody’s: Retail Sector to Grow Next Year

December 4, 2015  by in Economic News, Industry   

The provider of credit ratings, research, and risk analysis said it expects to see improved operating income growth in 2016 in retail. The rating agency's outlook is positive for retail, and stable for apparel and restaurants.

Mickey Chadha, a vice president and lead retail analyst for the company, said sales growth will for 2016 will improve to between 4 percent and 5 percent.

"We expect operating efficiencies and the leveraging of fixed costs in the U.S. retail industry will lead to improved operating income growth," said Mickey Chadha, a Moody's vice president and lead retail analyst. "Furthermore, large mergers, such as Home Depot's purchase of Interline and Albertson's purchase of Safeway, are generating significant synergies."

Eight out of 13 retail sub-sectors will see operating income growth exceed 5 percent, led by home improvement, auto parts, specialty and supermarkets, according to the company’s 2016 outlook. Convenience stores and discounters/warehouses, however, will continue to be a drag on broader industry performance as oil prices stabilize and Walmart's significant investments mute broader momentum. E-commerce sales will continue to outpace overall retail sales growth.