Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

The truth hurts.

U.S. retail sales in September and October rose at the fastest pace in two years, according to government data for October and revised data for September, both released Tuesday. The news contradicts a rash of retail and restaurant CEOs who have been blaming their poor sales on the presidential election, saying it has hammered consumer confidence and distracted would-be shoppers and diners.

Last month, I wrote about how this excuse could come back to bite these companies, as investors who hoped sales would return after the election might be disappointed.

It turns out that U.S. consumers have been spending -- the gains just aren't showing up across the board.

Clicking Away
Year-over-year growth in e-commerce merchants continues to outpace the growth of total retail sales and sales at traditional clothing stores
Source: U.S. Census Bureau

Sales did not improve in October for furniture stores and restaurants, but those were the only two of 13 categories tracked by the government that didn't notch sales growth. Car sellers, gas stations, and online merchants, meanwhile, saw outsize gains. 

Restaurant Growth Is Spent
After a decade in lock-step, year-over-year sales growth among restaurants, grocery stores, and superstores are diverging
Source: U.S. Census Bureau
Note: Not adjusted for inflation

But even within retail categories where sales rose in October -- such as building supplies, clothing, and sporting goods -- there's a growing divide between winners and losers. 

One such winner is Home Depot, which on Tuesday reported its 22nd quarter of positive comparable sales growth. The home-improvement retailer raised its guidance and said it didn't see the positive trends reversing in the next few years.

T.J. Maxx parent TJX, which littered its earnings release with happy exclamation points, said a rise in consumer traffic fueled a 5 percent jump in year-over-year comparable sales growth in the quarter from a year earlier.

And while Dick's Sporting Goods fourth-quarter earnings forecasts came in below Wall Street expectations, the sporting-goods retailer posted a 5 percent quarterly increase in comparable sales from a year ago and boosted its guidance for next year. 

The basket of retail winners stands out, particularly in contrast to an otherwise brutal quarter of earnings results from restaurants and retailers. 

Sales at 17 of the 33 restaurants covered by Bloomberg Intelligence that have released third quarter earnings were lower than expected in the quarter. 

Dining Divide
Year-over-year change in third-quarter same-store-sales at U.S. restaurants
Source: Bloomberg

Meanwhile, five of the six North American department stores that have reported third-quarter earnings have posted year-over-year comparable-store sales declines. As a group, department stores that have reported so far have posted an average EPS decline of 18 percent. 

Retail's Winners and Losers
Year-over-year change in third quarter comparable store sales
Source: Bloomberg

Government retail-sales data are backward-looking. Even well-performing retailers such as Home Depot and Dick's struck a cautious note about future quarters, sending shares in those companies down Tuesday despite the stellar earnings performance. And it's impossible to know how consumers will feel about spending in the all-important holiday quarter following an election result that has left the country bitterly divided. 

While it's never smart to bet against the U.S. consumer when it comes to holiday spending -- people kept buying holiday gifts even through the depths of the 2008 recession -- it's worth noting that retail-sales growth has slowed in November in five of the past six years in which there was a presidential election, going back to 1992. 

Meanwhile, department stores and restaurants are seeing consumers shift spending to e-commerce and grocery stores, respectively. Those structural issues aren't going away any time soon.

Expect shoppers to keep spending, but don't expect them to spread it evenly.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net