Holiday sales climb, boosting retailer hopes that shoppers will spend during uncertain 2024

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A person picks out clothing in a Lacoste store as retailers compete to attract shoppers and try to maintain margins on Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, on Nov. 24, 2023.

Vincent Alban | Reuters

Holiday sales rose 3.8% year over year to $964.4 billion, according to the National Retail Federation, as consumers spent on gifts and celebrations even after enduring a prolonged period of higher prices.

The tallied results, released by the NRF on Wednesday and based on retail sales data from the Commerce Department, were roughly in line with the major trade group’s expectations. The holiday sales total was not adjusted for inflation and included both in-store and online purchases.

Ahead of the holiday season, NRF had predicted that sales in November and December would rise 3% to 4% year over year to between $957.3 billion and $966.6 billion in spending. The forecast and holiday total exclude sales at automobile dealers, gas stations and restaurants.

The results echo findings of the CNBC/NRF Retail Monitor, which showed that holiday shoppers closed out the year on a positive note. In the two key months of the season, November and December, the Retail Monitor rose 3.7% and core retail gained 3.3% year over year, excluding autos and gas.

NRF’s chief economist Jack Kleinhenz said easing inflation and a strong labor market helped prop up holiday shopping.

“Consumer spending was remarkably resilient throughout 2023 and finished the year with a solid pace for the holiday season,” he said in a news release.

Nearly every retail category saw year-over-year gains. Electronics and appliance stores and health and personal care stores led the way with sales gains of 9.3% and 9%, respectively. Online sales and other nonstore sales rose 8.2% year over year.

On the other hand, sales at sporting goods stores were roughly flat, and sales at building materials and garden supply stores fell 3.9%. Sales at furniture and home furnishing stores declined 6.2%.

Despite the solid peak season, economists and retailers are weighing whether consumers’ resilience will continue in 2024. The new year brings dynamics that could drive or dampen spending, such as a divisive presidential election cycle, cooling inflation and the Federal Reserve’s decision about whether and when to cut interest rates. Retailers are also navigating supply chain disruptions in the Red Sea that have raised the risk of higher energy and shipping costs.

Retailers will kick off the earnings season in February, but Abercrombie & Fitch, Lululemon, American Eagle Outfitters and some others have already hiked their outlooks based on better-than-expected holiday sales.

Trends during the key season reflected a reversion to more typical pre-pandemic levels. Average sales growth during the holiday season was 3.6% from 2010 to 2019, according to NRF data. Those year-over-year gains shot up during the Covid-19 pandemic, as sales surged 9.3% in 2020 and 13.5% in 2021.

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