Sears store.

Shopping inside a department is still a dying thing, sorry optimists. 

Comparable sales at department stores from July 1 to July 14 fell 5.8% according to First Data, driven in large part by an 8% plunge in store traffic. The result is especially concerning in light of typical July 4 weekend promotions designed to get people into stores. Average transaction value rose 2.5%, likely as stores such as Macy's (M - Get Report) , J.C. Penney (JCP - Get Report) and others pullback on deep markdowns on key products like handbags.

What looks to be sluggish sales this summer call into question the recent rally in retail stocks, fueled by optimism on more Amazon (AMZN - Get Report) for Whole Foods (WFM) type deals. Further, Target (TGT - Get Report) sales guidance hike last week has also propelled the bull case on retail stocks. 

The SPDR S&P Retail ETF has rallied 3% over the past month, out-performing the S&P 500's 1.5% gain.

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