By Deborah Mary Sophia
       Aug 29 (Reuters) - U.S. retailers' earnings over the
past month have signaled that customers are spending on
discounted apparel, small home projects and beauty products even
as they slashed other discretionary purchases with prices still
    Retail sales in the U.S. rose more than expected in July
with strong wage gains underpinning consumption, but the
benefits have not been uniform across the sector.  
    Discount apparel chains TJX Cos         and Ross Stores
         and cosmetics retailer Ulta Beauty          have raised
their annual expectations, while others including Macy's      
and Kohl's         have taken a more cautious approach.
    Meanwhile, Walmart         has remained a more evident
winner, raising its annual outlook on robust demand for its
low-priced groceries and health and wellness products. 
    "Consumers are looking for value - some are switching to
private labels, some are buying more stuff on promotions,"
Edward Jones analyst Brian Yarbrough said.
    "All the excess inventory allows off-price retailers to get
some really good deals and then offer those great deals in the
stores, which drives traffic," he said, pointing to the upbeat
results at TJX and Ross Stores. 
    Sephora "performed exceptionally well" with strength in
North America in the first half of the year, the beauty
retailer's owner LVMH           said last month.     
    "While cosmetics is a discretionary item, it's a bit more
staple in nature. Despite higher inflation or a slower economy,
most people that wear make-up are going to continue to wear
make-up and use skin-care items or fragrances," Yarbrough said. 
    Retailers have also flagged the impact from Americans
prioritizing experiences like movies, vacations and concerts
over discretionary purchases.
    Tempered forecasts from sportswear retailers Foot Locker
       and Dick's Sporting Goods         also added to the mixed
picture, with Dick's also citing an increase in organized retail
crime and theft at stores. 
    Electronics retailer Best Buy         posted upbeat
quarterly results on Tuesday, and although the company trimmed
the top end of its annual sales outlook, CEO Corie Barry said
the industry would see "stabilization and possibly growth" next
    Top two home improvement chains Home Depot        and Lowe's
        also said demand remained firm in some business lines,
such as gardening and outdoor projects, with Lowe's saying
consumer sentiment was starting to improve.
    "Consumers may be looking for deals or are more
price-sensitive, priorities may have shifted, but they are
definitely still spending," said Liza Amlani, principal and
co-founder of consultancy Retail Strategy Group. 
    Inflation subsided further in July, as core inflation - the
annual rise in prices excluding volatile food and energy
components - fell to its lowest in nearly two years, according
to the U.S. Labor Department.
    "We've started to see consumer confidence begin to recover
from recent lows (as inflation rates moderate)... we're hopeful
that conditions can improve with time," Target's Chief Growth
Officer Christina Hennington said in an earnings call earlier
this month. 

 (Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj