The US Department of Commerce reported that July retail sales rose just 0.4%, mostly as a result of increased auto and gasoline sales. Excluding auto sales, the gain was halved, to 0.2%, and excluding gasoline and auto sales, retail sales actually fell -0.1%. Analysts were expecting a sales gain of 0.3%, excluding autos.
Retailers Dillard’s Inc. (NYSE: DDS) and J.C. Penney Co. (NYSE: JCP) reported earnings this morning before the retail sales figures were released. Earnings from both were better than estimates, but Penney’s reduced its forecast for the second half of the year and that’s weighing on nearly all retail stocks. Wal-Mart Stores Inc. (NYSE: WMT) and Home Depot Inc. (NYSE: HD
) report earnings next week. Today’s retail numbers suggest that investors should not be looking for a booming quarter from these two Dow Jones 30 stocks.
Car sales rose 1.6% in July compared with June and gasoline sales were up 2.3%. Clothing store sales fell -0.7% and general merchandise store sales fell -0.2%. Non-store retailers, such as catalogs and online stores, saw a sales rise of 0.2%.
The rise in non-store retail sales is interesting because in June a retail consulting firm noted that sales of full-price items rose 19% while sales of discounted items fell -26.6%. For brick-and-mortar stores, promotions and discounts are definitely a main driver for customer traffic. Without them, shoppers apparently just stay home and shop online. And pay full retail.
Consumer confidence, as tracked by a Reuters/University of Michigan poll, rose to 69.6 in August from 67.8 in July. The new figure still points to a depressed consumer, largely tied to a high unemployment rate and an economy that no longer seems to be growing.
Next week’s reports from Wal-Mart and Home Depot could fill in some details. Wal-Mart is expected to report EPS of $0.97 on revenue of $105.43 billion. Home Depot is expected to post EPS of $0.71 and revenue of $19.61 billion. Unless one or both stomp all over those expectations, more gloom is almost certain to set in.
GameChanger Stocks to Build Your Wealth. GameChangers are companies that rewrite the rules, revolutionizing the way we live and thrive. And their business breakthroughs delivered handsome profits for savvy investors who got in early. Discover the next generation of GameChangers you should be buying now. Download your FREE copy of Hilary Kramer’s new report here.
