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Retail sales were flat month over month in June, but that was better than the slump some economists predicted, and categories such as apparel performed well. Sales at clothing and clothing accessories stores increased 4.3% from a year ago and 0.6% from May, their second month over month increase in a row. Relatedly, sales at department stores increased 1.7% from a year ago and 0.4% from May.
- Retail sales overall were “virtually unchanged” from May, according to the Commerce Department, but were up 2.3% year over year. Meanwhile, core retail sales, which exclude motor vehicles and parts and gasoline stations, were up 0.8% month over month and 3.8% YoY.
The strong apparel numbers could validate the optimistic sales projections from national apparel retailers such as Gap and Abercrombie & Fitch in Q1, when the long-struggling Gap revised its projection from flat to slightly up, and Abercrombie & Fitch forecast a 10% bump in net sales for 2024. More recently, Canadian seller of “everyday luxury” Aritzia beat analyst estimates on earnings and boasted a 13% increase in net revenue in the US.
Polly Wong, president of Belardi Wong, a marketing firm specializing in luxury brands, told Retail Brew “that specialty, premium apparel brands are faring well this year, with sales increases in the high single digits helping to offset smaller gains in the mass market apparel category.”
She added that even with an increase in promotional activity in June, the firm saw average order value hold flat, “showing the strength of the consumer to spend (especially when there is a strong value proposition).”
Now the category could get another tailwind with the crucial back-to-school season getting underway and apparel remaining a significant portion of that spending. A recent survey from Deloitte predicts consumers will spend $12.6 billion on clothing and accessories this back-to-school season, which is 40% of the total.
The data also comes amid a shake-up for apparel. HBC, the parent company of Saks Fifth Avenue, has inked a deal to acquire rival Neiman Marcus, with backing from Amazon. And on Monday, Macy’s said it had terminated buyout talks with Arkhouse and Brigade after months of negotiations because of uncertainty around financing. The department store also expressed confidence in its own ongoing turnaround efforts; CEO Tony Spring said in a statement “that the Company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value.”