U.S. retail sales rose in July amid ongoing trade tensions and growing recession fears. Five retailers filed for bankruptcy during the late July through early August period, according to an analysis by S&P Global Market Intelligence.
Retail sales
U.S. retail and food services sales increased 0.7% from the previous month to $523.51 billion in July on a seasonally adjusted basis, according to a report released Aug. 15 by the U.S. Census Bureau.
National Retail Federation Chief Economist Jack Kleinhenz said in a statement that the July figures are "consistent with a confident consumer."
"Households are in good shape with spending and that should continue as long as the labor market remains healthy," Kleinhenz said. However, the economist noted that the data reflects activity from a month ago.
On Aug. 14, the U.S. Treasury yield curve briefly inverted, raising fears of a recession. Some retailers have also cautioned that a new batch of tariffs as part of an ongoing trade war between the U.S. and China could ding corporate earnings.
"The impact of volatile financial markets and increased trade tensions in recent weeks may put a wind of caution in consumer spending as we move forward in 2019," Kleinhenz said.
Still, strong retail sales expose a dichotomy between perception in the markets and the reality in the economy, Stephen Stanley, chief economist at Amherst Pierpont Securities said in an Aug. 15 research note.
"The financial markets have worked themselves into a frenzy that the U.S. is plunging into a recession, and the consumer sector, which represents about two-thirds of the economy, is about as strong as it has been in decades," Stanley said.

The overall rise in sales was helped by a strong increase in online purchases. Nonstore retailers, a category that includes e-commerce companies such as Amazon.com Inc., registered a month-over-month sales increase of 2.8%.
Sales in the subsector were $67.07 billion in July. The figures were likely supported by Amazon's Prime Day event. The online retail giant said July 17 that its sales for Prime Day 2019 surpassed the combined sales of its previous Black Friday and Cyber Monday events.
Sales at electronics and appliance stores increased by 0.9% to $8.18 billion during the month. Clothing and clothing accessories stores registered a 0.8% increase in sales to $22.55 billion.
Sales at motor vehicle and parts dealers decreased by 0.6% to $103.21 billion.
The consumer price index, meanwhile, increased 0.3% in July from the previous month, according to a monthly report released Aug. 13 by the U.S. Bureau of Labor Statistics. Prices jumped 1.8% year over year.
Prices for apparel increased by 0.4% in July from June, with women's and girls' apparel rising by 1%. Men's and boys' apparel also registered an increase of 0.9% in prices.
Footwear prices were unchanged in July, while prices of jewelry and watches declined 1.6% during the month.

Bankruptcy
Five Market Intelligence-covered U.S. retail companies filed for bankruptcy in late July and early August. The filings bring the bankruptcy count in 2019 to 24.
The total includes companies with a primary industry classification of retailing, household and personal products, or consumer durables and apparel, and a secondary classification of retailing. Public companies included in the list of companies with public debt must have at least $2 million in either assets or liabilities at the time of the bankruptcy filing, while private companies must include at least $10 million.
Loot Crate Inc., a fan-based commerce and community platform, filed a voluntary petition for reorganization under Chapter 11 on Aug. 11.
Luxury department store chain Barneys New York Inc. filed for Chapter 11 bankruptcy protection in the U.S. on Aug. 6. The company listed both its assets and liabilities in the range of $100 million to $500 million.
The company secured $218 million in funding from Brigade Capital and B. Riley Financial. According to CNBC, Barneys has until Oct. 24 to find a buyer to avoid liquidation.

Other retailers that filed for bankruptcy during the period include equipment-based education company Mad Dogg Athletics Inc., Mobile Addiction LLC, which distributes and sells wireless mobile phones and accessories, and Journey Blooms Inc., which retails rubber stamps, ink, cardstock and accessories.
Department store operator Here Today LLC, which had an involuntary petition for liquidation under Chapter 7 filed against it, has been removed from Market Intelligence's current list. Market Intelligence discovered that Here Today's total assets and liabilities did not reach the threshold requirement for inclusion.
Employment
The retail sector lost 3,600 jobs in July, down to 15.8 million jobs. That is a decrease of 0.02% from June, according to an Aug. 2 monthly report from the U.S. Bureau of Labor Statistics.
Electronics and appliance retailers shed 5,700 jobs during the month, down 1.22% to 462,600 total. Jobs at nonstore retailers also declined by 1,700, or 0.29%, to 577,300 for July.
Employment at gasoline stations rose by 2,800 jobs, a 0.29% increase to 954,700 jobs. Food and beverage stores added 5,300 jobs or 0.17%, in July to 3.1 million jobs.

Vulnerability
An August analysis of the one-year probability of default scores identified 15 U.S. department stores and apparel companies with scores ranging from 13.4% to 2.5% and corresponding implied credit scores of "ccc+" to "b+."
Specialty retailer Christopher & Banks Corp. continued to top the list as the company's one-year probability of default was unchanged from July's iteration.
Centric Brands Inc., which moved into the No. 3 position, saw its probability of default increase to 9.1%, up from 5.6% the month prior. This pushed several retailers down from their mid-July positions while there was little to no change in their one-year probabilities of default.

S&P Global's Fundamental Probability of Default Model provides a fundamentals-based view of credit risk for corporations by assessing both business risk — including country risk, industry risk, macroeconomic risk, company competitiveness and company management — as well as financial risk, such as liquidity, profitability, efficiency, debt service capacity and leverage. For a more thorough review of the model, see the PD Model Fundamentals - Public Corporates whitepaper. |

