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U.S. retail sales in July came in higher than expected, but only some retailers—such as Walmart—apparently benefitted from share of consumers’ wallets.
Retail sales rose 1 percent in July to $709.7 billion, following June’s downward revision of a 0.2 percent decline, according to the U.S. Census Bureau. The consensus estimates of economists called for an uptick of just 0.3 percent. That’s considered good news about consumer spending, which accounts for 70 percent of GDP, and is viewed as an indication of the health of the broader economy. But a deeper dive into the data suggests that apparel isn’t top of mind for consumer spending.
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Sales at apparel and accessories specialty stores were essentially flat at $26.24 billion from $26.25 billion in June. Department store sales slipped 0.2 percent to $10.95 billion from $10.98 billion the prior month.
Department store retailer Dillard’s Inc. has been upping its fashion quotient since February, but said on Thursday that men’s apparel and accessories were the weakest categories in the quarter. It didn’t disclose how women’s fashion fared, but did note that it saw moderate gross margin decreases in shoes, women’s apparel and accessories, lingerie, and home and furniture.
In contrast, mass discounter Walmart Inc.’s CEO Doug McMillon said on Thursday in its second-quarter earnings report that each part of its business is growing, from store and club sales to e-commerce. Although the discounter has evolved its business to include more fashion selling and at high price points online, Walmart’s position as a low-cost provider on the consumables front nabs it record sales from consumers on the hunt for value. And Walmart’s automation push helps with store-fulfilled deliveries.
And while consumers weren’t spending their hard-earned cash on apparel, they were buying electronics and appliances, which saw July sales rise 1.6 percent to $1.97 billion. They also patronized health and personal care stores, which saw sales rise 0.8 percent to $37.11 billion. Online retailers also saw a sales gain of 0.2 percent to $122.67 billion.
Consumers were also spending on food and experiences. Food and beverage store sales rose 0.9 percent to $83.71 billion, while restaurants and bars saw a sales uptick of 0.3 percent to $94.67 billion.
One other key economic data point from last week was a decrease in initial jobless claims to 227,000 for the week ended Aug. 10. That’s lower than the consensus estimate of 235,000 and coupled with the improved retail sales report, some believed that the American consumer remains resilient despite fears of a recession on the horizon.