Holiday sales jumped 8.5% as buyers ignored higher prices

As shoppers start a wave of returns and exchanges or rush to spend gift cards, retailers seem to have reason to rejoice: Holiday spending is up 8.5% from a year ago. one year, according to SpendingPulse Mastercard.

The gain was slightly smaller than the 8.8% increase Mastercard had predicted, but it was the largest annual increase in 17 years. Still, some fear that a strong holiday season could create more difficult January and February.

“Consumer demand remains very strong, but we are cautiously optimistic as traffic slowed down a bit in December,” Oliver Chen, retail analyst for Cowen, said on CNBC’s “Squawk on the Street”.

Chen said he still has moderate expectations for how the industry will perform during the holiday season and beyond. Inflation and the Covid omicron variant are weighing on the minds of consumers at the same time as supply chain challenges exert business pressure. In the event that buyers’ appetites weaken or the goods arrive at the wrong time, it will force retailers to increase markdowns.

Retailers and investors are just starting to get a feel for the peak shopping season. Data from Mastercard, one of the first glimpses of the season, tracks in-store and online retail sales from November 1 to December 24 for all forms of payment except auto sales.

According to its measure, retail sales are well above pre-pandemic levels, with total sales increasing 10.7% on this holiday compared to the same period in 2019. In-store sales increased by 2. 4% and online sales jumped 61.4% compared to two years ago. .

Since the pandemic, online shopping has become a common holiday shopping habit. Ecommerce sales jumped 11% from 2020 to 2021, according to Mastercard. Online sales accounted for almost 21% of total retail spending, roughly in line with the period a year earlier and up from 14.6% in 2019.

Certain retail categories were particularly successful. Clothing sales and jewelry sales increased by 47.3% and 32% respectively compared to the same period of the previous year. They increased 29% and 26.2% compared to the holiday season in 2019. Sales of electronic products jumped 16.2% compared to the period of the previous year.

Chen said some retailers, including Walmart, Costco and Target, are better positioned than others because they cover all categories of merchandise and have online shopping options, such as curbside pickup and delivery to. home, as people are looking for convenient and safe ways to shop. Walmart and Target shares were both trading below 1% on Monday, while Costco shares were up over 2%.

Luxury retailers, including jeweler Brilliant Earth and high-end home decor retailer RH, have benefited from less price-sensitive consumers who splurge on expensive earrings, handbags, furniture and more. , did he declare. Shares of Brilliant Earth and RH were down slightly on Monday.

Chen added that Macy’s and Kohl’s are attractive stocks because stocks have underperformed. On Monday, Macy’s was up more than 3%, while Kohl’s gained nearly 2%. After a tough year for department store inventories in 2020, Macy’s is up 131% year-to-date. Kohl’s has gained more than 25% since the start of 2021.

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