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U.S. retail sales up 0.3% in October, lower than 0.5% expected

U.S. retail sales increased less than expected in October, the slowest pace in six months. Yahoo Finance’s Emily McCormick breaks down the report.

Video Transcript

JULIE HYMAN: Let's start, though, with some big retail earnings and retail numbers from the US as a whole, as well. Emily McCormick is joining us to give us the details on that. US retail sales up about 3/10 of 1%. Drill down for us, Emily.

EMILY MCCORMICK: Well, Julie, take a look at these US retail sales. That rise coming in, that 3/10 of a percent that was short of the 0.5% increase that had been expected for October over September. And this also followed a downwardly revised 1.6% rise in September. Now, taking a look by category, we saw clothing and accessories stores as well as sporting goods and hobby stores posting the biggest monthly declines.

Sales at both of those fell 4.2% month over month. And while retail sales as a whole are back above pre-pandemic levels, I do want to note that sales at clothing stores and food services and drinking places are still well below where they were before the outbreak. So still quite a bit of pressure here when we look at some of those stores hardest hit by stay-in-place orders and other restrictions.

Now, on the flip side, for categories that did well in October, we did see in nearly 1% rise in sales at building material stores. And we also saw the big standout was non-store retailers, or those online stores. Sales there rose 3.1% month over month and are now up more than 29% over last year. And we did have Amazon Prime Day as well as Target deal days taking place in October this year. So likely getting a bit of a boost from those sales events in particular.

So on the whole, consumers still spending, Julie, albeit a little bit less enthusiastically than we saw over the summer.

MYLES UDLAND: Emily, you mentioned the strong period that we saw in October for non-store retailers. A company out with earnings this morning bragging about the strength of their e-commerce business, that would be Walmart. Tell us a bit about those results.

EMILY MCCORMICK: Well, taking a look at those digital sales in particular at Walmart, those again a standout. We saw those up 79%. So moderating a bit from the 95% jump that we saw in the second quarter. But again, still much stronger than we saw before the pandemic for this company. And then taking a look at those closely watched US comparable stores excluding gas-- those are up 7.1% in the third quarter. Well above the 4.3% rise that had been expected.

And then in terms of sales trends, we did see-- Walmart mentioned that they saw their sales accelerate in September due in-part to delayed back-to-school spending. And they also saw grocery sales strengthen as the quarter progressed lead by comparable same store sales in their food category.

Now, I do want to highlight that Walmart shares are now trading lower. They did turn negative during the earnings call this morning-- that is still under way. And that came after Chief Financial Officer Brett Biggs said that the company is still having trouble keeping inventories as high as they want for some of their high-demand categories. And they also declined to provide forward guidance for the rest of the year due to uncertainty around the COVID-19 pandemic.

Now, Walmart also posted $600 million in incremental costs in the third quarter due to COVID-19. And CFO Brett Biggs also mentioned that those costs are likely to continue on for Walmart for the time being given that the pandemic is still underway. Now again, shares in that company still up 28% for the year-to-date and outperforming the S&P 500. Myles and Julie.