Turns out there's going to be a Christmas this year after all. The newswires were burning up early on Monday after retail analytics firm ShopperTrak estimated total retail sales on Saturday would come in at about $10 billion. That's almost $1 billion higher than Black Friday, which we declared dead as a concept in this very space almost 2 months ago.
So for the 91st time in the last 100 years the Saturday before Christmas will be the biggest shopping day of the year. Overall it looks like the original National Retail Federation estimate of 4.1% sales growth will be about right. Consumers are spending, no matter how tempting it is to think otherwise. That's probably why you see the XRT retail ETF (XRT) lagging for the year but exploding higher in the last three months. Gas prices are falling, jobs are available and Americans like to shop. Go figure.
Here are a couple other key takeaways from this Christmas and 2014 as a whole for retail:
I expect this will finally be the year when the line between on and off-line merchants all but disappears. Lost in all the whining by retailers over the drop in mall traffic is the fact that stores and mall owners are in different businesses. Monday morning I ordered a book from Amazon (AMZN). It arrived on my desk in less than two hours. Yes, I'm in midtown Manhattan, literally walking distance from an Amazon fulfillment center, but traditional big box retailers are finally carving out meaningful chunks of their stores for the purpose of fulfilling on-line orders.
In specialty this was the year of athletic wear as mainstream trend. Look at the charts for Nike (NKE) and especially Yahoo's company of the year Under Armour (UA). Whipping tail on the S&P 500 all year, as you can see. But look particularly at the last few months. Last summer two things occurred to Wall Street: first, the World Cup wasn't the only catalyst forathletic spending. There's a fashion and
even secular trend happening in athletic wear. The stocks were strong all year but you can really see separation from the market for the retailers in the last six months.
As always, fashion is a fickle mistress. Going into 2015 there are huge bets being placed on casual and athletic over fashion. Look at transfer from shares of Michael Kors (KORS) into former disaster Lululemon (LULU). I'm long Lulu and even I get a little nervous when I see that type of performance. What I take comfort in is knowing that almost a fifth of Lulu's sales come from online. That gives me two tailwinds; the bare minimum needed to keep me long specialty retail.
Overall this was the best 12 month in ages for investors in retail. The consumer, as it turns out, is still alive and kicking butt. Keep that in mind the next time you see one of those absurd headlines about Christmas disasters next year.
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