Retail sales may be picking up momentum into the holiday season

Retail sales rose 0.4% month-over-month in October to top the consensus expectation for a gain of 0.3%. On a year-over-year basis, retail sales were 2.8% higher. Core retail sales, which excludes motor vehicles and parts, rose +0.1% M/M and 2.7% Y/Y.

Categories that outperformed in October included general merchandise stores (+3.1% Y/Y), nonstore retailers (+7.0%), and miscellaneous store retailers (+4.0%). Those marks are consistent with the view of analysts that the holiday season could be solid for major retailers such as Walmart (WMT), Target (TGT), Costco (COST), and Amazon (AMZN), with those major chains expected to add to their cumulative market share at the expense of smaller retailers.

Categories that lagged ahead of the holiday season included furniture & home furnishing stores (+1.5% Y/Y), department stores (+0.0%), and electronics & appliances stores (-2.3). That last category could have some implications for Best Buy (BBY) and Whirlpool (WHR), depending on the breakdowns.

As for the holidays, the National Retail Federation has predicted that shoppers will increase their spending in November and December by between 2.5% and 3.5% over the same period a year ago. Adobe forecasts online holiday spending will accelerate this year to +8.4% year-over-year to $241 billion after rising just +4.9% last year and +3.5% growth in 2022. The firm attributed the acceleration in part to consumer focus on price/value dynamic and stronger price sensitivity given easing.