- U.S. retail sales rebounded in November 2025 (+0.6% m/m; +3.3% y/y), signaling resilient consumer demand heading into year-end.
- E-commerce led growth (+7.2% y/y) alongside gains in sporting goods and clothing, while furniture and electronics remained weak.
- ELF Beauty grew sales 9% y/y after acquiring Rhode, but tariffs and input costs compressed margins and drove profits lower.
- Amazon was downgraded to Neutral on valuation and limited incremental AWS upside despite its strong competitive position.
Read More
The November 2025 retail sales data confirms a marked rebound in consumer spending heading into the end of the year. Total retail and food service sales rose by 0.6% m/m following a revised -0.1% decrease in October, and were up approximately 3.3% y/y. Core measures excluding volatile sectors such as autos and fuel paint a stronger picture—core retail rose by +4.3% y/y, supporting expectations for resilient GDP growth in Q4.
While November’s increase is broad-based, sectoral divergence remains evident. E-commerce (nonstore) retailers jumped +7.2% y/y, reflecting both shift toward online channels and early holiday spending. Sporting goods and clothing continued to outperform. In contrast, categories like furniture/home furnishings and electronics/appliances remain under pressure, with m/m declines or flat performance, indicating discretionary fatigue among consumers sensitive to credit costs and inflation.
In the beauty segment, ELF Beauty’s Q1 FY2026 results underscore both opportunity and risk. Sales rose 9% y/y, driven by the completed acquisition of Rhode (for $1B) and strong performance across channels and markets. However, tariffs—particularly on Chinese inputs—and margin compression are real concerns. Gross margins declined (69%), and net income dropped 30% y/y. These trends suggest that while premium growth is available, maintaining profitability will be increasingly difficult amid input cost inflation and trade policy headwinds.
Amazon’s recent downgrade by Rothschild Redburn to Neutral reflects similar strategic caution. While AMZN continues to benefit from growth in nonstore retail and AWS, the analysis argues that AWS has reaccelerated as much as could be expected, leaving limited upside versus lofty expectations. This signals that even dominant platforms face constraints amid macro pressure, valuation concerns, and intensifying competition.
Strategic implications: Retailers and consumer brands should prioritize channels and categories with sustained demand (e-commerce, sporting goods, value beauty). Cost management, particularly in supply chain and tariff exposure, will likely determine winners. Investors should be cautious in overweighting firms already trading at premium multiples unless their margin trajectories are clear. Open questions include how much further consumers can spend under inflation and debt pressures, and whether early November’s strength will carry through December and into early 2026.
Supporting Notes
- U.S. total retail sales rose +0.6% in November 2025 vs. October; October was revised down -0.1% m/m. Year-on-year growth was +3.3%.
- E-commerce (nonstore) retailers rose +7.2% y/y. Sporting goods up +1.9% m/m; clothing & accessories up +0.9% m/m. Electronics/appliance stores flat m/m.
- ELF’s Q1 FY2026 net sales: US$353.7 million, up 9% year-over-year; completed the Rhode acquisition; U.S. retail and e-commerce channels plus international growth drove performance.
- Tariffs trimmed ELF’s gross margin from higher import costs; net income fell ~30% YoY; EBITDA margins projected below prior year levels due to trade pressure.
- Amazon downgraded from Buy to Neutral by Rothschild Redburn; price target reduced to ~$250; concerns focus on limited additional upside from AWS despite its competitive position, including versus Microsoft Azure and partnership with Anthropic.
- Categories with weak performance: furniture & home furnishings saw declines; electronics/appliances flat or down, indicating discretionary spending under strain.
- Control group sales (excluding autos, gas, building materials, and restaurants) rose +0.4% m/m in November, suggesting underlying consumption has momentum despite headwinds.