Retail sales fall 0.6% in November, below estimates

Yahoo Finance Live anchors discuss November retail sales.

Video Transcript

[AUDIO LOGO]

BRAD SMITH: So let's continue this conversation in terms of some of the economic data that we're seeing come out this morning. US retail sales fell more than expected in November. It declined 6/10 of a percent month-over-month. This is the biggest monthly drop in nearly a year. Possible warning sign for the economy, as the Fed continues to raise rates here.

And looking across some of the key segments here, especially as we've been continuing to watch in those discretionary portions of the consumer spending environment, where we do see some continued weakness and where consumers are continuing to push back on prices. And that continues to be the case. I mean, electronics, you saw that decline in the most recent month.

And then additionally, you also looked across some of the other core necessities spending categories, too. And we still did see some softness there, even though we did see a rise in grocery stores of about 8/10 of a percent here recently.

BRIAN SOZZI: First thing I did, guys, off of this report is I went to check some of the premarket action in stocks like Macy's and Abercrombie & Fitch. Of course, both of those stocks are down. The base-- the main takeaway from this report is that the retail season may be coming in worse than expected.

And then what does that mean for retailers that entered this holiday season with high levels of inventory? Perhaps they're going to have to more aggressively mark down this stuff that clearly has not sold like they thought. What does that mean for margins? What does that mean for fourth-quarter profits?

And then also, when do these warnings start to come from the sector? Do they happen the week after Christmas? Which is what usually happens, you start to hear a lot from these retail companies.

JULIE HYMAN: Now, one important thing to note about this report is it's not inflation adjusted. So inflation, as we learned last month, was rising at a slower rate but it was still rising. And so to see outright drops for retail sales and for many of these categories, even with increases in price, is quite telling and interesting.

Now, you mentioned what's going on with some of the department store retailers this morning. Department stores down 2.9% in terms of their sales in the month. In the holiday season, department stores down 2.9%. Non-store retailers, a.k.a. Amazon and pure play, but a lot of that number is Amazon, down 0.9%.

So this is really interesting. We keep talking about how is this holiday season going to be. This gives us a hint of what this holiday season is gonna be.

BRAD SMITH: Yeah, and I'm glad that we showed the stock chart there a moment ago for Dick's-- or not the chart but at least a board of some of the biggest retailers. Because within the sporting goods, hobby, musical instrument, bookstores, you saw some declines coming in about 6/10 of a percent.

And you think about what this means for selling through, even some of the sports equipment that perhaps isn't moving out of the stores as quickly as Dick's would hope or even in their subsidiaries in Golf Galaxy. But what this also means for just moving through that inventory, have that pass through. Also means, perhaps, even more of a headwind for a Peloton out there, too, if you see more of that sporting equipment just kind of sitting in some of the square footage at their stores, too.

JULIE HYMAN: And sort of related to that, by the way, just a more minor data point that I just want to mention because it was so bad. Empire Manufacturing negative-11.2 was the reading for December. So that's a pretty current number. Negative-1 is what economists were estimating. So yet another negative.

BRIAN SOZZI: Who said it was gonna be a slow November-- our December, I should say? December. It has been a full on data explosion here.