No holiday cheer expected for US retailers
THE holiday shopping rush that kicked off on Friday in the United States is unlikely to bring much cheer to investors looking for a revival in retail stocks.
After months of uninspiring sales growth and recent disappointments from Macy's and Nordstrom, shareholders of apparel sellers have had little to be thankful for and face a challenging holiday season.
Retail sales were expected to grow by 3.7 per cent in November and December, declining slightly from the 4.1 per cent growth in the same period last year, the National Retail Federation (NRF) said in a forecast on Sunday.
NRF's survey of 4,281 consumers in the US showed shoppers on average spent or planned to spend about US$300 (S$424) over the Thanksgiving weekend, which ran from Nov 26 to 29.
That is down from about US$381 over the same weekend last year, but the federation said the figures aren't comparable because of a change in its survey's methodology.
The survey also showed an equal number of US shoppers sought to buy items online as they did in physical stores over the Thanksgiving weekend.
That could in a way help brick-and-mortar retailers who also have significant online sales.
Craig Johnson, principal at retail consultancy Consumer Growth Partners, projects that total weekend sales could be up 2 per cent from last year if rising online sales balanced out slowing in-store demand.
Shares of Macy's and Nordstrom have reflected a shift by consumers away from discretionary items like designer-label clothes and cosmetics towards online spending and merchandise such as smartphones, televisions, home goods and travel.
Macy's stock has plummeted 39 per cent this year while Nordstrom is down 22 per cent and Tiffany & Co is 23 per cent lower - all far worse than the benchmark S&P 500 index's 1 per cent gain.
On the other hand, Home Depot has surged 29 per cent this year and discount store Dollar Tree is up 6 per cent.
The S&P 500 retail index has risen 27 per cent this year, with much of that gain driven by its largest component, Amazon.com, which continues to undercut brick-and-mortar rivals and has seen its stock more than double this year.
Earnings expectations vary for the holiday shopping quarter; Lowe's on average is expected to grow its earnings by 29 per cent from a year ago while video game store GameStop is seen growing earnings by 9 per cent, according to Thomson Reuters data.