November retail sales data are out amid an economy which has
been exposed to a number of mixed events. On one hand, the Labor
Department indicated that initial jobless claims have fallen
29,000 to 343,000; on the other, consumer sentiment is showing a
negative inclination, largely due to the looming fiscal cliff.
Again, the unemployment rate declined to 7.7% in November from
7.9% in October, but it remains well above the Federal's
long-term target of 5.2% to 6.0%.
In such a scenario, November retail sales data revealed an
upswing from October. According to the data released by the U.S.
Department of Commerce, total retail and food services sales
(including non-general merchandise categories such as
automobiles, gasoline stations and restaurants) jumped 0.3% in
November, rebounding from a decline of an equivalent percentage
Hurricane Sandy did enough to derail November sales, but a
modestly improving job market, falling gasoline prices and a
resurging housing market favorably impacted the holiday shopping
season, with consumer spending picking some momentum. Data
compiled by National Retail Federation (NRF), the nation's
largest retail trade group, suggested that November retail sales
(which exclude automobiles, gas stations and restaurants) inched
up 0.8% from October.
Consequently, NRF reiterated its holiday sales forecast of
4.1% jump in November and December period to $586.1 billion,
which is short of the 5.6% growth registered last year. However,
it is above the 10-year average sales increment of 3.5%.
Sandy dampened the November comparable-store sales performance
Nordstrom Inc. (
, all of which missed the forecasts. However,
Costco Wholesale Corporation
Limited Brands Inc.
) performed above expectations. (Also read:
Sandy Derails November Comps
Home improvement retailers, such as
Lowe's Companies Inc.
), were the beneficiaries when Hurricane Sandy hit the U.S. East
Coast. Customers rushed to get hold of flashlights, generators
and batteries before the storm and came back to buy materials for
repairing purposes after Hurricane Sandy wreaked havoc.
The question now is, "Will December retail sales mirror or
surpass November's performance?" The answer is very tough at this
juncture, as the economy is surrounded by slew of events, the
latest being the Fed's announcement to spend $45 billion to buy
long-term treasuries in addition to the $40 billion per month in
mortgage-backed bonds. The Fed also said that it will continue to
maintain short-term interest rate at near zero levels till the
U.S. unemployment rate drops below 6.5%.
However, this encouraging announcement was not enough to
negate the Fiscal Cliff of $600 billion in tax increases and
spending cuts. Republicans and Democrats continue to wrangle
about ways to find a solution. Analysts are thus projecting soft
economic growth as companies shy away from making big investments
until a negotiation is reached. The austerity measures and fear
of impending tax hike are creating some panic among
Thus, we believe that retailers have to cover this holiday
season with compelling pricing, promotional strategies and new
products launches to attract shoppers. Despite lingering
concerns, we hope the arrival of Christmas guides demand higher
and shed consumers' apprehension.
COSTCO WHOLE CP (COST): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis
KOHLS CORP (KSS): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
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