Yahoo Finance America is sick and tired of its old clothes: Morning Brief
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Wednesday, June 16, 2021
Clothing sales are soaring in 2021.
The re-opening trade has taken many forms over the last year.
Suburban housing, auto sales, airlines, and hotels have all been straightforward beneficiaries of a newfound enthusiasm for remote work. With mass vaccinations and the removal of most COVID-19-related restrictions under way, Americans are also hitting the roads and taking to the skies again.
But a surprise winner in this re-opening frenzy has been the apparel industry. Because as life gets back to normal, it seems that consumers have been remaking their closets like crazy.
May retail sales fell 1.3% from the prior month, a larger-than-expected decline, data showed on Tuesday. Most economists in The Morning Brief's inbox framed this disappointment relative to expectations, more of a normalization in consumer habits than a harbinger of a major slowdown to come.
However, a standout category last month was clothing and accessories retailers — where sales jumped 3% over last month and a whopping 200% over last year. In April, the numbers were even gaudier, as clothing sales rose 765% over 2020; for the March through May period, clothing and accessories sales are up 229% in 2021, compared to last year.
Like so many data sets, of course, these readings are warped by the pandemic. Tens of millions of people lost their job almost overnight in March and April of 2020.
Combine this labor market stress with massive store closures, mandates that people avoid non-essential trips outside their home, and a mass shift to remote work for millions of workers, and we can see why conditions weren't exactly ripe for apparel retailers last spring.
Back out these comparisons, however, and we see that consumer spending on clothes is still well above pre-pandemic levels. The desire to remake your closet is real, even if a 200% surge in sales flatters this story a bit.
And as my colleague Brian Sozzi has written, whether its Macy's (M), Target (TGT), TJ Maxx (TJX), or Levi Strauss (LEVI), retailers across the economy are seeing customers stock up on apparel in a big way.
Consumers heading back to the office, on a vacation, or just out to see friends are noticing all at once what many readers have likely seen themselves when digging into their closets for the first time in a year: people are sick and tired of all their old clothes.
So while the most important macro shift captured in Tuesday's retail sales data showed an economy continuing to turn back towards spending on services instead of goods, clothes stand out as a crossover category. But those sales complement — yet don't compete against — the economy's continued rotation away from stuff and back towards experiences.
By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland
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What to watch today
Economy
7:00 a.m. ET: MBA Mortgage Applications, week ended June 11 (-3.1% during prior week)
8:30 a.m. ET: Housing starts month-over-month, May (4.5% expected, -9.5% in April)
8:30 a.m. ET: Building permits, month-over-month, May (-0.2% expected, -1.3% in April)
8:30 a.m. ET: Import price index, month-over-month, May (0.8% expected, 0.7% in April)
8:30 a.m. ET: Export price index, month-over-month, May (0.7% expected, 0.8% in April)
2:00 p.m. ET: FOMC monetary policy decision
Earnings
After market close: The Honest Company (HNST) is expected to report adjusted losses of 6 cents per share on revenue of $79.26 million
4:30 p.m. ET: Lennar (LEN) is expected to report adjusted earnings of $2.37 per share on revenue of $6.21 billion
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