Retail sales remain strong as new government data beat expectations and showed off a surprising 2.7% growth rate in sales year over year in June. Once you exclude auto sales, this figure rises even further, to 3.1%.
This matches the medium-term trend for retail sales, which have generally been rising over the past couple of years.
Source: Pantheon Macro
However, digging into the details of the July recent sales report reveals that there was once again a very clear winner and loser.
Nonstore retailers, which are generally just online retailers, have seen their sales continue to surge, rising 14.2% year over year. This continues a long-term trend of outperforming general retail sales, which can be seen from the chart, tweeted by Bloomberg reporter Matthew Boesler, below:
In almost every quarter, with the notable exception of the early 2000s, (back when malls were the place to be for young teens) nonstore retailers have trounced overall retail sales.
On the other hand, department stores, have continued to see their sales deteriorate. Sales for this category were down 3.7% over the past year, though it was at least up from last month’s print by 0.7%. The long-term trend is still down though, with sales having peaked back in the early 2000s.
Many department stores such as Kohl’s (KSS), Nordstrom (JWN), Macy’s (M), etc, primarily sell clothing and this subcategory saw their sales fall 1% from last month. These apparel retailers have already seen their sales and margins fall sharply over the past few quarters, so the most recent data simply exacerbates the trend. This does not bode well for these companies, which are set to report Q2 earnings next month.
Rayhanul Ibrahim is a writer for Yahoo Finance.