Retailers seem to be looking to brighter times ahead if the latest Retail Sector Performance Index is any indication. But increasing retail inventories and reduced traffic look to dampen profits as pricing comes under pressure.

The Index came in at 47.6, just under April’s 47.7. The Index is a reflection of retail executives’ evaluations of the categories below. The RSPI runs on a scale from 0-100, with a score of 50 equal to normal.

The Operations Index rose significantly for the month as retailers start to see a large buildup of inventories. As a result, the Pricing Index, which measures the sector’s discounting power, fell to 20.3 for the month.

“It appears that retailers have stepped up discounting in the face of the inventory buildup,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd.
“Retailers trying to sell spring and summer merchandise have been hoping the weather will cooperate.”

The RSPI is developed by the National Retail Federation and the Bank of Tokyo Mitsubishi Ltd. through its monthly Executive Opinion Survey.