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The final word on holiday sales is in — and retailers are feeling pretty good.
Core retail sales grew a stronger than expected 4 percent during November and December combined, according to the National Retail Federation’s reckoning of the latest official figures from the Census Bureau on Thursday.
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That gain was helped along by inflation, which according to the Consumer Price Index drove prices up 2.9 percent last year. But the end result was still a stronger sales gain than the 2.5 percent to 3.5 percent increase the NRF had penciled in.
The day also brought other signs of some momentum for fashion retail.
Target Corp. said it saw “a meaningful acceleration in discretionary categories during the holiday timeframe, most notably in apparel and toys.”
That marks an important turn for the retailer, which reported that total sales rose 2.8 percent during November and December. Target is projecting that its fourth-quarter comparable sales will now rise 1.5 percent, stronger than the flat performance it projected in November.
But as that increase did not translate into an increase in the profit projection, shares of Target slipped 2 percent to $131.92 in midday trading.
Target is good example of how, even when the sector is seeing some momentum, retail is a tough world to navigate — on Wall Street and beyond.
“Consumers came out to spend this holiday season and clearly underscored the solid growth in the U.S. economy,” said Jack Kleinhenz, chief economist at the retail trade group. “The spending pace was back to pre-pandemic growth and indicates a good start for the year ahead.”
During the two-month rush into the end of the year, sales were propelled by e-commerce and other non-store retailers, which posted an 8.6 percent increase. Apparel and accessories speciality stores showed a 2.8 percent holiday gain.
Overall, Neil Saunders, managing director of GlobalData, described 2024 as “a surprisingly good year with a very strong finish.”
“Although consumer confidence and finances remain somewhat wobbly, most shoppers were determined to have a happy holiday and put their hands in their pockets accordingly,” Saunders said. “Lower gas prices gave most households a bit more headroom to spend, but in a reflection of the continued tight state of finances, the use of credit to buy products increased by 5.9 percent, with a particularly sharp rise in the use of buy now, pay later facilities. This may well cause something of a financial squeeze as we move into the new year.”