Higher crude oil prices jolted investors and gave them a reason to jump back into the market, which pushed up tech stocks in particular. But the retail sector outpaced major indices amid a positive consumer confidence report.
At the closing bell, the Dow Jones Industrial Average finished with a gain of 193 points, or 1.1 percent, to 17,720, while the broader S&P 500 rose 1.1 percent to 2,078. The Nasdaq closed the day with a 1.3 percent gain to 5,107. The S&P 500 Retailing Industry Group Index increased 1.7 percent to close at 1,308. Crude oil gained 2.8 percent to $37.83.
Trading volume was light, and during the past three trading sessions, New York Stock Exchange volumes were 35 percent below average, while Nasdaq volumes were 28 percent below average. Most of the big, year-end trades by institutional investors have already been done, which is partly why volumes are lighter.
Also buoying retail stocks were reports of improved sales during the last-minute rush before Christmas as well as better-than-expected sales-per-shopper data released today for the eight-day period ended Dec. 27. Meanwhile, one report that analyzed markdown activity for the week leading up through the recent holiday weekend showed that retailers held back from aggressive promotions in the hopes that shoppers would fold first and grab last-minute gifts.
Some top retail gainers today included Tilly’s Inc., with a 5.8 percent increase to $6.62, and Zumiez Inc. with a 3.9 percent gain to $16.04. Kohl’s Corp. closed the bell up 3.3 percent to $48.81, while Target Corp. rose 2.2 percent to $74.44. The Gap Inc. increased 2.1 percent to $25.63.
There were some decliners, though, which included The Bon-Ton Stores Inc. with a 4.6 percent drop to $2.06 and Lululemon Athletica Inc. with a 1.5 percent drop to $52.37. The Men’s Wearhouse closed the day down 1.2 percent o $14.85.
Earlier in the day, major indices in Europe all closed up. London’s FTSE 100 experienced a 1 percent gain to 6,315 and a 1.9 percent increase in Frankfurt’s DAX to 10,860. The CAC 40 in Paris rose 1.8 percent to close at 4,701.
Analysts at Telsey Advisory Group have been tracking markdown activity in the department store segment for the holiday shopping season and noted in their most recent report that while they had “anticipated the overall promotional cadence to heighten the week of Dec. 21, it did just the opposite — promotions scaled back from the depth of site-wide markdown rates to overall order discounts.”
“We believe retailers made adjustments to play the game consumers have become very well-known to play, which is to shop last-minute in order to get the best deals possible,” the analysts said in their report. “For the moderate department stores, Bon-Ton and Stage [Department Stores] appeared to be most aggressive with a variety of special offers and site-wide discounting, while Kohl’s held promotions constant with the prior week and J.C. Penney [Co. Inc.] reduced its offers. For the better department stores, Macy’s was the most promotional with sales across almost all categories, while the others focused on gifting ideas and liquidating sale merchandise and cold weather items, such as sweaters and boots.”
In a separate report from RetailNext, the analytics firm said the eight-day period running from the Saturday before Christmas through the Sunday following Christmas “shows mostly positive trends for physical retail. Traffic was down almost 2.6 percent, but with very strong sales-per-shopper results of 9.2 percent stemming from higher conversion and average transaction value.”
RetailNext also said returns were down 1 percent year-over-year during the period. Regarding the holiday shopping season, the firm said in-store traffic, sales and conversions mirrored last year, which the company described as a “book-end performance” — meaning the season began in early November and surged in the post-Christmas weekend.
“Sales-per-shopper continue an upward trend,” the researchers at RetailNext said in their report. “Shoppers are clearly well-researched when they go to stores, and they show up at the door with a strong intent to buy. Retailers need to be aware of the continuing changing role of the retail sales associate.”
With apparel and accessories, that research is specifically framed by price point. And as Telsey Advisory Group noted, it’s a promotional game that pits retailer against the savvy shopper. But that could be changing.
“For the first time in quite a while, the majority of department stores appeared to be on the same page in terms of pulling back on discounts in such a crucial selling period and we believe they could have beat out the consumer, especially given the short time frame and increased need to buy last-minute gifts,” said Dana Telsey, chief executive officer of Telsey Advisory Group, in her research report. “That said, with the New Year shortly approaching, retailers are running out of time to liquidate unwanted inventories in order to reset for the spring season.”