For all the headlines this month of weak department store sales and closing stores, retailers enjoyed a stellar holiday season, buoyed by higher wages and soaring consumer confidence.
U.S. retail sales in November and December, when many stores get 25% of their annual sales, rose a better than expected 4%, according to the National Retail Federation, which bases its figures on government data. Total holiday sales, which exclude cars, gas and restaurants, hit $658.3 billion, the trade group said. The NRF in October had forecast 3.6% growth, but the economy clearly worked in retailers’ favor.
“These numbers show that the nation’s slow-but-steady economic recovery is picking up speed and that consumers feel good about the future,” said NRF President and CEO Matthew Shay.
NRF Chief Economist Jack Kleinhenz noted that average hourly earnings were up in 2016 over 2015, and unemployment was low. What’s more, home values have risen, as has the stock market, making shoppers feel wealthier, and more eager to shop.
Still, much of the brisk business overall reflected the abundance of deals, showing that shoppers are as bargain-hungry now as they were during in the first years after the Great Recession, if not more.
That was clear in the weak sales results of among other Macy’s (m) and Kohl’s (kss) that saw strong business during the Black Friday weekend and again in the final days before Christmas, the two-most promotion driven times of the season, with customers sitting on their hands waiting for deals at other times. Both chains reported comparable sales were down 2.1% during the holidays. J.C. Penney (jcp) fared better but still saw a 0.8% decline. At perennial loser Sears (shld) they fell 13%. As a group, business fell 7% at department stores, according to the NRF.
“While there might have been some bumps in the road for individual companies, the retail industry overall had a solid holiday season and retailers will work to sustain this in the year ahead,” Shay added.
Most retailers will report their holiday season results only next month. But the season was likely rough for electronics retailers, where sales fell 2.3% but stellar for beauty retailers, where sales were up 6.7%. Clothing stores fell somewhere in between with a 2.5% gain. And surprising no one, online sales stole the show, rising 12.6%, according to the report.