The government said that retail sales in December rose 0.1%, which was below the expected 0.3% rise. And excluding auto sales, which rose 1.5%% in December, retail sales would have fallen 0.2%, against the 0.3% rise (excluding autos) that economists surveyed by Marketwatch had been expecting.
Signs of weakness appeared in areas that had been expected to perform well. In particular, sales at electronics stores fell 3.9%, and sales at online retailers fell 0.4%. Sales at department stores (excluding leased department stores) fell 0.2%.
The holiday shopping season may have gotten an extra-early start this year. November retail sales were revised up to a 0.4% month-over-month gain, and in general retailers mostly reported very robust November sales. But December same-store-sales were underwhelming, with Target (TGT) and some others disappointing the Street. That, along with data showing that consumer credit rose in November more than it has in a decade, paint a somewhat worrisome picture.
Can consumers keep up their spending pace without loading up their credit cards with an unsustainable amount of debt? Without sustained job growth, can retailers continue to grow?
Earnings reports coming out in the next few weeks may give us more clarity.
“Aggressive discounting helped drive sales gains for the holiday shopping season, but also crimped margins for many retailers.� It was good news for shoppers looking to stretch their budget and for retailers able to grab market share, but it came at a price.� Some key retailers have already guided earnings expectations lower, but the broad impact should become more apparent as earnings are reported in the coming weeks,” wrote Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors.
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