Retail sales breakdown: Electronics, appliances, and personal care shine as big-ticket categories lag

Retail sales topped expectations in July by rising 1.0% month-over-month to $709.7 billion. On a year-over-year comparison, retail sales rose 2.7%. Core retail sales were up 0.4% month-over-month vs. +0.1% consensus.

Categories that showed strength included electronics & appliance stores (+1.6% M/M, +5.2% Y/Y) and health & personal care stores (+0.8% M/M, +3.4% Y/Y). Those marks could be a positive for retailers such as Best Buy (BBY), Whirlpool (WHR), and Walgreens Boots Alliance (WBA). Analysts have been pointing to the potential for an upgrade cycle with consumers for items such as laptops, desktop computers, and home appliances. Larger-ticket categories such as building materials (+0.9% M/M, +0.4% Y/Y) and furniture (+0.5% M/M, -2.4% Y/Y) underperformed once again.

The grocery store category was solid for the month (+1.0% M/M, +2.8% Y/Y) even as food price inflation has moderated a bit. The July CPI report indicated that the closely watched food category was up 2.2% year-over-year, with food away from home up 4.1% during the month and food at home up just 1.1%. Those prices are adjusted for packaging or container sizes to account for the trend in the food industry of companies offering less product per package. The pace of inflation for food at home has now been below the Federal Reserve's overall target rate of 2% for nine straight months, although the overall level of food prices is still considerably elevated compared to two and three years ago. Notably, grocery store stocks Kroger (KR), Sprouts Farmers Market (SFM), Natural Grocers by Vitamin Cottage (NGVC), Weis Markets (WMK), and Village Super Market (VLGEA) all have positive share price gains for the year.