Retail sales breakdown: Clothes and AI laptops are winning out over furniture and home improvement

Retail sales were flat in June on a month-over-month basis, but beat the consensus expectation for a 0.3% decline. On a year-over-year comparison, retail sales rose just 2.3% to match the pace in May.

Categories that showed weakness included furniture & home furnishing stores (-4.0% Y/Y) as the outlook for big-ticket item demand continues to be shaky for retailers such as Williams-Sonoma (WSM), Wayfair (W), Lovesac (LOVE), and RH (RH). There was also another decline in spending in the building materials & garden equipment supplies dealers category (-0.9% Y/Y).

The nonstore retailers category (+1.9% M/M, +8.9% Y/Y) outperformed again, although some of the bounce may be attributed to large retailers such as Walmart (WMT) and Target (TGT) running promotions a few weeks ahead of Amazon (AMZN) Prime Day.

Notably, the clothing and clothing accessories category (+0.6% M/M, +4.3% Y/Y) outpaced the broad retail numbers for the second straight month. That could be an indication that the recent stretch of improvement for Gap (GPS), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), and Urban Outfitters (URBN) will continue into the back-to-school season. The department store category that includes Macy’s (M), Kohl’s (KSS), and Nordstrom (JWN) also moved higher during the month. Meanwhile, the closely watched electronics appliance category showed another bump (+0.4% M.M, +2.7% Y/Y). There has been growing speculation in the analyst community that Best Buy (BBY) is primed for a strong second half from an appliance refresh cycle and AI laptop boom.