US retail sales were flat in April as consumers pared down their spending on discretionary purchases but increased their grocery budgets.
Retail and food services sales were unchanged from March, according to US Census Bureau data published May 15. Sales were significantly weaker than the 0.4% growth economists had anticipated for the month, according to data compiled by Econoday.
Weaker sales and high interest rates saw six retailers seek bankruptcy protection between mid-April and mid-May, while the median default risk for all retail categories decreased.
Retail sales
US retail and food sales totaled $705.18 billion in April, only marginally higher than the revised $705.06 billion in sales achieved in March and 3% above April 2023.
Consumers tightened their purse strings the most at nonstore retailers, a category that includes online shopping, with a 1.2% decline in sales. The category was still up 7.5% year on year and up 8.7% from February to April compared to the year-ago period, the strongest results of any retail category.
Sales at sporting goods, musical instrument and book stores; car dealers; health and personal care stores; and furniture stores all fell by 0.5% or more in April, with all but car dealers' sales also below the previous April's sales totals.
An increase in the costs associated with car ownership is likely contributing to lower motor vehicle sales for the month, in addition to record-high auto loan interest rates.
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On an annual basis, sales were weakest at furniture stores with an 8.4% decline, followed by sporting goods, musical instrument and bookstores with 4.7% lower sales.
Bankruptcies
Faced with changing consumer behavior and challenging operating conditions, six retailers opted to file for bankruptcy during the month ended May 15, more than in any other monthlong period over the past year.
Apparel retailers Express Inc., New Rue21 LLC and ET-A-LL LLC accounted for three of the filings. Express plans to close 95 of its approximately 530 US and Puerto Rico retail stores through the reorganization process.
In court filings, both New Rue21 and music retailer Sam Ash Music Corp. said they were negatively impacted by the pandemic and consumers shifting from brick-and-mortar retail to online shopping.
Appliance retailer Pirch Inc., grocery store operator Outfox Hospitality and ET-A-LL all filed for Chapter 7 bankruptcy, which involves a total liquidation of assets and termination of operations.
Default risk
The median default risk for all retail categories dropped from 2.4% in mid-April to 2.1% in mid-May as most sectors' default risk fell.
Default risk for computer and electronics retail and household appliances fell by the greatest margins, with declines of 2.7 and 2.3 percentage points, respectively. Despite the decrease, household appliances remained near the top of the list of industries with the greatest risk of default by mid-May at 5.8%. Only drug retailers had a higher default risk at 6.7%.
Drug retail and home furnishing retail were the only two categories to record an increase in default risk over the monthlong period.
Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.