Holiday 2017 was undeniably a retail success story — the question now is how much of a lift there actually was.
As retailers total up their pre-Christmas sales — and welcome flocks of consumers looking for post-holiday sales or to return those not-quite-right presents — analyst estimates for the season are beginning to come in. And they show that this year is likely to be one of the best in at least several — if not in more than a decade.
According to Customer Growth Partners, total sales from Nov. 1 through Christmas Eve reached $598 billion, or 5.6 percent above the same period a year ago. CGP predicts sales from Christmas Day through Dec. 31 will reach $73 billion, bringing U.S. holiday sales for Nov. 1 through Christmas Eve to $671 billion, or up 5.7 percent.
“That’s the highest percent gain since 2005, which was 6.1 percent,” Craig Johnson, president of Customer Growth Partners, said Tuesday. The CGP numbers are based on census data and store visits around the country by CGP staff, and exclude restaurants, gas and autos.
“This is very healthy growth and sustainable growth. It’s broad-based” across different retail sectors and income levels, Johnson said. “Everybody is up, even apparel for the first 10 months of the year was up 1 percent and in November and December is up 5 percent. This is the strongest growth we have seen in apparel in years.”
Home, driven by home improvement, is even better, up about 8 percent, Johnson added.
“So far today, business is brisk and strongest at Best Buy and Apple,” Johnson said. “Even department stores on average are slightly up. Nordstrom will be nicely up, but Sears will pull the numbers down. The great shrinkage in capacity we’ve seen at department stores since last holiday is making business healthier. We’re seeing better traffic. Many chains have been right-sized.”
Mastercard SpendingPulse reported that holiday sales increased 4.9 percent, setting a new record for dollars spent. This is the largest year-over-year increase since 2011 and a further indication of consumer confidence, Mastercard said.
Online shopping saw large gains of 18.1 percent compared to 2016, boosted by a late-season rally, according to Mastercard.
“Overall, this year was a big win for retail. The strong U.S. economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase,” said Sarah Quinlan, senior vice president of Market Insights, Mastercard.
Mastercard is more bullish than the National Retail Federation, which forecasts a 3.6 to 4 percent retail sales gain for the November to December period.
New strategies included enhanced shipping deals and the option to buy online and pick up the purchase in stores, making it more convenient for shoppers who once in the store in many cases did some unintended shopping. Retailers also extended Black Friday and Cyber Monday promotions before and after the actual days.
“There was a good response over the Thanksgiving weekend and it carried forward through December,” said retail analyst Walter Loeb.
Retail stocks, particularly department stores, were buoyed on Tuesday by positive sales reports. Macy’s was up 4.52 percent to $26.85; J.C. Penney rose 5.08 percent to $3.31; Kohl’s was up 5.96 percent to $56.87; Nordstrom, up 1.91 percent to $48.47, and Dillard’s was up 1.84 percent to $63.25.
Target ticked up 0.66 percent to $65.82, the chain’s highest price since May, and Wal-Mart Stores grew 0.97 percent to $99.16, it’s second-highest price for the year. Shares of Amazon were up 0.72 percent to $1,176.76, its third-highest level for the year.
Specialty stores, too, got a boost. Gap Inc.’s shares were up 1.45 percent to $34.94; Abercrombie & Fitch was up 4.62 percent to $19.03; Urban Outfitters was up 2.62 percent to $35.63; Victoria’s Secret operator L Brands is up 2.61 percent to $62.95; PVH Corp., the parent company of Calvin Klein and Tommy Hilfiger, was up 0.63 percent to $136.52; Ralph Lauren rose 1.53 percent to $103.39; Signet Jewelers was up 2 percent to $57.74, and Tiffany & Co. rose 2.29 percent to $105.20. For all of these companies, save PVH, these are yearly highs.
As a whole, retail trade stocks are up 5.03 percent compared to three months ago, according to CNN Money’s stock tracker.
Beauty didn’t fare as consistently well on the post-holiday stock market. Shares of L’Oréal declined 0.69 percent to $186.80, and Revlon dropped 2.18 percent to $22.40. E.l.f. Cosmetics did better, rising 2.46 percent to $22.95, as did Coty, which ticked up 1.05 percent to $20.15, and Ulta Beauty which rose 0.18 percent to $226.68.
Loeb said the earlier Hanukkah and retailers’ “strong” print and online ads keyed to weekend sales were important factors spurring business. “Inventories now at the end of the season are probably much cleaner than last year and because of this tight control of inventories, many stores will show better profits than anticipated,” he said.
Retailers were also helped by the calendar, the weather and consumer confidence. There was a full weekend to shop before Christmas Day. There were virtually no severe winter conditions through most of the country to impede shopping, and most consumers are feeling financially secure due to the strong stock market, wage and employment gains and impending tax cuts.
The Mastercard SpendingPulse report details holiday shopping from Nov. 1 through Dec. 24 and covers retail sales across all payment types, including cash and check. Among the key findings from Mastercard:
• Electronics and appliances increased 7.5 percent, the strongest growth of the last 10 years. The home furniture and furnishings category grew 5.1 percent, as did home improvement.
• Specialty apparel and department stores, which both traditionally see the bulk of sales happen in-store, saw moderate gains. “This is particularly impressive given recent store closings.”
• Retailers’ heavy early-season promotions paid off, with the first three weeks of November seeing significant jumps.
• In addition, shoppers were still spending late into the season, with Super Saturday — Dec. 23 — ranking second to Black Friday in terms of single-day spending.
• Jewelry grew 5.9 percent, largely driven by last-minute sales.
Macy’s said Monday that cold-weather items such as coats, sweaters and active fleece did well; fragrance continued to be a strong performer, especially in stores where there was high buy-online, pick-up-in-store penetration in the week leading up to Christmas for last-minute gifters. Macy’s also said family pajamas, “Star Signature” diamonds, “giftable” home items like down comforters and stand mixers, and gourmet food were strong sellers.
Now retailers have to deal with this week’s rush of returns, putting pressure on them to process returns efficiently. According to the NRF, 13 percent of all purchases will be returned.
Right after Christmas Day, retailers unleashed steeper markdowns on winter and clearance items. Macy’s launched an after-Christmas sale, offering $10 off purchases of $25 or more, with several exclusions, and free shipping on purchases of at least $49, with furniture, mattresses and other exclusions.
Lands’ End offered 60 percent off winter items; Joe Fresh staged a post-holiday sale with 30 percent off select clearance items, and Kenneth Cole footwear offered up to 65 percent off.
Retail experts said December gains, while good, are not expected to be as strong as the November ones. U.S. core retail sales jumped up 0.9 percent in November month-over-month, outpacing November 2016 by 5.5 percent, according to AlixPartners. Those are seasonally adjusted November retail sales excluding motor vehicles, gas, food services and drinking places.
In its report issued Tuesday, AlixPartners wrote, “Managing the flood of returns will be critical to closing out a jolly holiday season, but it won’t be easy. Returns, and especially online returns, can wreak havoc on distribution centers and bottom lines.”