19 May, 2025

Dining spend nudges slower April retail sales to meet forecast; 1 new bankruptcy

By Nick Lazzaro and Annie Sabater


US retail and food services sales in April inched up from elevated spending activity in March, when consumers likely engaged in a pre-tariff spending spree.

Total retail and food services sales in the US grew 0.1% month over month in April, according to seasonally adjusted advance estimates from the US Census Bureau. The sales bump matched analyst consensus expectations based on economist forecast data compiled by Econoday. However, when excluding a food service spending increase at restaurants and bars, retail sales alone slipped 0.1% from March.

The slimmer retail sales increase in April follows a consumer splurge in March as consumers pulled forward demand ahead of anticipated US tariff announcements. The US introduced global tariffs on April 2, but the new policy was eventually delayed. The US has also eased its stance on some tariffs after reaching trade deals with the UK and China in early May.

S&P Global Market Intelligence recorded one new bankruptcy filing among public and certain private retailers from April 17 to May 15. The default risk for publicly traded retail companies decreased in mid-May from mid-April.

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Sales

Adjusted retail and food services sales totaled a combined $724.13 billion in April, up from $688.63 billion in April 2024. Adjusted sales over the first four months of the year were up 3.8% year over year.

Sales in April increased in only five of the 13 retail and food service categories tracked by the Census Bureau data on a month-over-month basis.

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Spending at food services and drinking places gained 1.2% from March, representing the category with the largest sales increase. Among retailers, building material and garden equipment suppliers fared the best with April sales rising 0.8% from March.

"Retailers in the home improvement space are benefiting from strong demand for renovations and home improvements," said LPL Financial Chief Economist Jeffrey Roach in an email. "Given the abnormalities in the housing market, we should expect that to continue if the labor market holds."

Gasoline station sales were down 0.5%, while motor vehicle and vehicle parts retail sales were down 0.1%. Total retail and food service spending, excluding vehicle sales, in April was up 0.1% from March, missing the consensus estimate of 0.3% based on data compiled by Econoday.

Bankruptcies

Rite Aid Corp. filed for bankruptcy on May 5, entering the reorganization process for the second time in two years.

Since filing, the pharmacy giant has entered into a series of sale agreements and pharmacy services transition agreements for hundreds of its locations. This includes a plan to transfer pharmacy assets from more than 1,000 of its US store locations to pharmacy competitors and grocery chains such as CVS Health Corp., Walgreens Boots Alliance Inc., Albertsons Cos. Inc., The Kroger Co. and Giant Eagle Inc.

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There have been seven retail sector bankruptcies in 2025 through May 15, according to Market Intelligence data. More broadly, the consumer staples and consumer discretionary sectors combined had 44 bankruptcies among large public corporations and private companies through the end of April.

Default risk

The odds of default for publicly traded retailers dipped to 3.6% on May 14 from 4.1% on April 14, according to Market Intelligence's market signal probability of default model. The data encompassed 207 retail-sector companies.

The scores represent the median odds of default on debt within a year and are based primarily on the volatility of share prices for public companies on major US exchanges, accounting for country- and industry-related risks and other macroeconomic factors.

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Of the 16 distinct retail industries tracked by Market Intelligence in May, the median probability of default scores increased for only two retail categories — drug retail and food retail — and fell for 12.

The median default risk score for drug retail was the highest among all categories, spiking to 8.2% from 6.2%. The median default risk for food retail moved up slightly to 0.7% from 0.6%.

Retail outlook

The 10 largest S&P 500 retail companies by market capitalization as of May 14 are expected to book a total revenue of $532.28 billion in the second calendar quarter, according to Visible Alpha consensus estimates compiled May 15. This is up from the revenue of $516.59 billion reported for the first quarter and the $503.76 billion logged for the second quarter of 2024.

Visible Alpha is a part of Market Intelligence.

The top six S&P 500 retail companies are all expected to report year-over-year growth in their respective total revenues for the first quarter of 2026. Amazon.com Inc. is projected to see the biggest revenue increase with a 10.4% jump, while more modest gains are expected from Kroger, The Home Depot Inc. and Lowe's Cos. Inc.

Meanwhile, retailers will likely slow their new store expansion by year-end. The nine largest S&P 500 brick-and-mortar retailers are projected to add a net average of 33 stores in the third quarter, the highest since the third quarter of 2024. Average net store additions are then expected to slow to 21 in the fourth quarter and 23 in the first quarter of 2026.

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