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Retail sales disappointed in May with a 0.1% month-over-month falling short of the consensus expectation for a 0.3% rise. On a year-over-year comparison, retail sales rose just 2.3%.
Categories that showed weakness included furniture & home furnishing stores (-1.1% M/M, -6.8% Y/Y) as the outlook for big-ticket item demand continues to be shaky for retailers such as Williams-Sonoma (WSM), Wayfair (W), Lovesac (LOVE), and RH (RH). There was also a decline in spending in the building materials & garden equipment & supplies dealers category (-0.8% M/M, -4.3% Y/Y) for a month that it seasonally important for Home Depot (HD) and Lowe’s (LOW).
The nonstore retailers category (+0.8% M/M, +6.8% Y/Y) outperformed again, although analysts have noted the strength in online sales has been mainly at the top through Amazon (AMZN), Walmart (WM), and Target (TGT).
Notably, the clothing and clothing accessories category (+0.9% M/M, +2.4% Y/Y) outpaced the broad retail numbers. That could be an indication that the recent stretch of improvement for Gap (GPS), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), and Urban Outfitters (URBN) could continue. The electronics & appliance category also showed a bump (+0.4% M.M, +1.8% Y/Y). There has been growing speculation in the analyst community that Best Buy (BBY) is primed for a strong second half of an appliance refresh cycle and AI laptop boom.
