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Online Shoppers Help End 2019 Holiday Season on a Strong Note

Zacks Equity Research

The 2019 holiday shopping season for the Retail-Wholesale sector turned out to be a mixed bag, though the overall numbers depict strength. A run through the holiday season reveals that the online channel remained the preferred shopping medium over the brick-and-mortar platform.

Online Steals the Limelight

Online channel was the prime gainer in the 2019 holiday showdown. Per National Retail Federation (“NRF”), the nation’s largest trade group, online and non-store sales increased 14.6% to $167.8 billion compared with its October forecast of 11-14% increase. This also marked a double-digit growth for the fourth consecutive year.

Further, MasterCard SpendingPulse (which records sales between Nov 1 and Dec 24) notes that online sales grew 18.8% in the 2019 holiday period, accounting for 14.6% of the total retail spending. Robust online sales were the result of more U.S. shoppers turning to online purchases during the season.

Moreover, in 2019, the Thanksgiving holiday, which is the start of the holiday shopping season, fell on November 28 compared with November 22 last year. This left retailers with six fewer shopping days between Thanksgiving and Christmas in 2019. The shortened shopping period led retailers to offer omni-channel sales with “Buy Online Pick-Up In Store” (BOPIS) earlier this season.

Additionally, retailers have significantly invested in the expansion of omni-channel offerings in recent years. Same-day delivery, lockers for picking up goods at stores, improved online sites and checkouts, remained prominent this shopping season. Smartphones were the most used to make online purchases this holiday season, accounting for nearly 84% of the holiday season’s e-commerce growth, per MasterCard SpendingPulse.

Conversely, soft sales at the brick-and-mortar channel took a toll on the results of retailers, impacting the same-store sales numbers. According to MasterCard SpendingPulse, department stores witnessed a sales decline of 1.8%, while overall apparel sales were up just 1%. Slowdown in sales for apparel and department store chains was mostly due to declines at brick-and-mortar channels. Meanwhile, apparel was a strong performer on the e-commerce platform, recording 17% growth in online sales. Also, online sales for department stores improved 6.9% during the holiday season.

Holiday Sales Numbers

Per NRF, holiday sales in 2019 rose 4.1% to $730.2 billion, which was at the higher end of its October forecast of 3.8-4.2% increase. Holiday sales, which exclude sales from automobile dealers, gasoline stations and restaurants, almost doubled from a 2.1% growth witnessed in the 2018 holiday season. Holiday results in 2018 were soft on government shutdown, interest rate hikes and stock market volatility.

The retail sector primarily gained from a favorable economic backdrop, with strong employment levels and improving wages giving consumers the confidence to make purchases. This also kept consumer spending high during the holiday period.

Moreover, per MasterCard SpendingPulse, U.S. holiday sales (excluding automobiles) were up 3.4% from the prior-year period, with strong gains from the e-commerce platform.

Retailers’ Mixed Holiday Numbers

Clear from the above discussion, retailers with online presence cheered this holiday season. While the e-commerce giant Amazon AMZN did not report holiday sales numbers, it stated that the season was strong with robust deliveries throughout the period. lululemon LULU raised estimates for the fourth quarter, driven by robust customer demand for its innovative merchandise during the holiday season.

Further, the apparel retailer Abercrombie & Fitch ANF accomplished record revenues in the United States in the Black Friday week. Meanwhile, its rival American Eagle reported flat comparable sales driven by strength in the Aerie brand and AE’s signature jeans collections. These apparel companies reiterated the forecasts for the fourth quarter.

Also, Zumiez ZUMZ and Signet reported comparable sales growth of 6.8% and 1.6%, respectively, for the holiday season. Target TGT witnessed comparable sales growth of 1.4% for November and December, with comparable digital sales up 19%.

Meanwhile, Macy’s M reported a 0.6% decline in comparable sales, on an owned plus licensed basis for November and December combined. Moreover, department store chains like Kohl’s and J. C. Penney JCP saw comparable sales declines of 0.2% and 7.5%, respectively. Further, struggles continued of the owner of Victoria’s Secret, L Brands, with a 3% decline in comparable sales for the holiday period.

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Click to get this free report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Zumiez Inc. (ZUMZ) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Macy's, Inc. (M) : Free Stock Analysis Report J. C. Penney Company, Inc. (JCP) : Free Stock Analysis Report To read this article on Zacks.com click here.