After a period of lull, retail sales rebounded in October. Gains across categories including auto dealers, gas stations and Internet stores helped overshadow declines in other categories such as clothing, sporting goods, furniture and food services to name a few.
Let us, thus, have a look at why some categories gained, and why some others lost.
October Retail Sales
The Commerce Department, recently, reported that retail sales rose 0.3% in October, which is a 3.1% increase from a year ago. What’s more, retail sales rebounded from September’s 0.3% contraction, the weakest level of outlays since February. The report showed that U.S. consumers have spent more on buying cars and made significant online purchases. However, higher tariffs imposed in September on many consumer products imported from China and trade uncertainties held consumers back from spending heavily.
Even though retail sales rebounded, details show that consumer spending cooled down. After all, U.S. consumers held back from purchasing household items and clothing, which may further temper strong holiday sales expectations.
Consumer spending at restaurants and bars dropped 0.3% in October, offsetting the 0.8% gain in the prior month. This also marks the biggest drop in almost a year for restaurants and bars. Additionally, sales across the leisure goods space, including hobby, musical instrument and books, also dropped by 0.8%.
Rising prices for houses and apartments have also impacted sales at building material stores, which dropped 0.5%. Evidently, this has also impacted the home remodeling market and sales of furniture and home furnishings. Sales at furniture stores dropped 0.9%, the largest decline since December 2018 and sales at electronics and appliance stores fell 0.4%.
The clothing space, in particular, seems to have borne the brunt of the protracted U.S.-China trade tiff. Receipts at clothing stores dropped 1%.
On the brighter side, gains across auto dealers, gas stations and Internet stores surpassed the losses incurred in the aforesaid categories. Per the report, auto sales rose 0.5% in October in contrast to its decline of 1.3% the month before. Additionally, receipts at service stations soared 1.1%, clearly due to higher gasoline prices.
Meanwhile, a few out-of-the-box initiatives boosted online sales among top retail firms like Walmart Inc. (WMT - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Target Corporation (TGT - Free Report) , helping the online and mail-order retail sales category to rise 0.9%. Needless to say, retail behemoth Walmart already registered 41% growth in its online business in the third quarter, with much of the improvement coming from the grocery section. Walmart, by the way, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the meantime, competition to beat Walmart’s low-price dominance had forced Amazon to eliminate the $14.99 grocery delivery fee for its Prime members. This in turn boosted Amazons’ grocery sales. Amazon, currently, has a Zacks Rank #3 (Hold).
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