Holiday Sales Increase 4 Percent With Mixed Results

Sales for the winter holiday season increased 4 percent to $616.1 billion, according to the National Retail Federation, slightly missing forecasts.

The Washington, D.C.–based trade organization had forecast that retail sales for holiday shopping in the months of November and December would increase 4.1 percent. The trade group’s economists also noted that if sales for gas, autos, restaurants and building materials were excluded, December retail sales actually dipped 0.9 percent. The finding concurs with the U.S. Commerce Department’s survey that noted December sales declined 0.9 percent.

Jack Kleinhenz, the NRF’s chief economist, said in a Jan. 14 statement that the U.S. economy was resilient.

“While December’s figures are disappointing, holiday sales in 2014 are the best we’ve seen since 2011. We remain positive about the future and expect to see consumers continue to benefit from the extra income gained from an improved job market and the dramatic fall in gas prices. It is important to recognize that December is a very difficult month to adjust for seasonal forces because of holiday spending, and this could explain, in part, this month’s volatility.”

Wall Street analysts and retailers had mixed reviews for the holiday season. Adrienne Yih-Tennant, a Wall Street analyst for Janney Capital Markets, wrote that the past two months were good for many apparel retailers.

“The holiday season 2014 was clearly better than expected for softline retailers, with the vast majority of retailers beating on the top line and toward the higher end of the range on the bottom line,” she wrote in a Jan. 14 research note.

One winner for the 2014 holiday was e-commerce. Reston, Va.–headquartered comScore said U.S. retail e-commerce from desktop computers for the November–December period increased 15 percent compared with the same time last year. According to comScore data released Jan. 7, $53.3 billion was spent on desktop computers for gifts during the season.

Some retailers and malls ended 2014 on a high note. Outlet retailers at the Citadel Outlets, near downtown Los Angeles, typically offer discounts of 25 percent to 65 percent off retail prices, and many of the outlet mall’s retailers forecasted an increase of December sales of 9 percent to 30 percent greater than the previous year, said Traci Markel, the Citadel’s director of marketing.

For Fraser Ross, founder of Kitson, the Los Angeles–headquartered specialty chain of 27 stores, the holiday season was profitable. He reported that his company’s December same-store sales were higher than the same month in the previous year. However, he declined to reveal the figures. Kitson’s secret was that it gave the public what it wanted—albeit, public demand changed quickly.

“We had items at the right price,” he said. “The kids’ apparel business was up tremendously, almost 100 percent.”

Other Wall Street analysts, such as Jeff Van Sinderen of B. Riley & Co., thought the season’s business was hurt by overly aggressive discounting.

“Merchandise was moved; sales were up marginally versus last year,” he said. “The bigger question was what was the quality of that business? How much was done on a ‘buy one, get one free’ deal?”

During December, Macy’s stores were offering discounts of 25 percent to 65 percent off. The Gap offered a winter sale with some items discounted up to 70 percent.

Fred Levine, co-owner of the M.Fredric chain of stores, headquartered in the Los Angeles area, noted that winter holiday business for his stores followed a similar script for winter holiday in 2013. There was a lot of business done on Black Friday, the traditional start of the season, followed by a lull. Business started moving again after Dec. 10 and skyrocketed the weekend before Christmas.

However, cold weather in Los Angeles County during December sparked a lot of business in the sales of outerwear and sweaters. After Christmas, consumers still were looking for sweaters and outerwear.

“The conditions couldn’t have been better,” Levine said. “It was cold but wasn’t rainy.” If it was rainy, Los Angelenos may have stayed home.

Many analysts criticized the holiday as not having a “must-have” item to drive sales. However, Barbara Fields of the Barbara Fields Buying Office, headquartered in Los Angeles, listed some of the most popular items for the season, including fur vests, “ugly” Christmas sweaters with a comic edge, sweater dresses, leggings and outerwear such as fur jackets, ponchos and capes.