The retail industry report for the crucial holiday shopping season is in.
American shoppers surprised analysts, economists and even retail executives by spending more than expected in November and December. But on closer inspection it appears that not all retailers benefit from this.
Retail sales during the holiday season rose 4 percent from a year earlier, according to Commerce Department data. Purchases of cars, clothing and electronics helped boost sales.
Over the past week, some retailers have shared how business has been going during the holidays – and there will be more reports in February. Target's total sales in November and December rose nearly 3 percent from the previous year, trending higher as people put more clothes and toys in their shopping carts. Abercrombie & Fitch said sales exceeded expectations and forecast growth of 7 to 8 percent during the 2023 holiday shopping season.
Lululemon, the maker of $98 leggings and other activewear, said it expected sales growth of 11 to 12 percent in the fourth quarter. “I still see a consumer who is healthy,” Lululemon CEO Calvin McDonald said in an interview.
However, at some retailers, customers seemed in no mood to spend.
Signet Jewelers, owner of Kay Jewelers, Zales and Jared, said fourth-quarter comparable sales would decline as much as 2.5 percent due to weaker-than-expected sales in the days leading up to Christmas. When it came to “fashion gifts,” customers were “even more attracted to lower prices than expected,” Joan Hilson, Signet's chief financial and operating officer, said in a statement, and the company didn't have enough of what shoppers were looking for.
Macy's, which warned analysts in December that its customers were holding back, said fourth-quarter sales were about flat. The department store chain is in the months-long process of closing 66 of its 479 stores, from Philadelphia to Sacramento, with more to follow in 2026. But comparable sales are up at the Macy's locations it sees as its future . Bloomingdale's and the beauty chain Bluemercury, which it also owns.
Macy's isn't the only chain shrinking. Kohl's, which has had 11 straight quarters of declining sales, says it will close 27 “underperforming” stores by April. The department store chain has more than a thousand stores.
Since 2022, when inflation curbed consumer spending and shoppers limited their visits to favorite stores, footfall and sales have declined. The upturn that the holidays normally bring to retailers hasn't saved them all.
In the past month, a number of struggling retailers — the fabric and craft chain Joann, the Container Store and Party City — have declared bankruptcy. Party City and Big Lots, which went bankrupt in September, are closing all their stores.
“If there's a company that was kind of praying for a holiday to actually save them, I think it probably didn't save them,” said Isaac Krakovsky, a retail sector leader at consultancy EY, who regularly communicates with retail managers. “It probably gave them enough time to limp along a bit more because of the promotional nature of the holiday.”
The forecasts for the US economy also remain foggy. Some forecasters expect U.S. economic growth to be about 2 percent in 2025, adjusted for inflation, which would be a modest slowdown from roughly 2.5 percent growth in 2024. But the International Monetary Fund said Friday it expected US economic growth would accelerate slightly. this year.
Many analysts are reluctant to view the surprising strength of the holiday shopping season as an indication of how consumer spending might evolve in 2025, given the many uncertainties surrounding the incoming Trump administration and how fiscal policy could influence purchasing decisions.
“There are questions about policies announced in January that could make consumers think twice before spending their money,” said Mickey Chadha, vice president at Moody's Ratings. “It could be tariffs, it could be immigration, it could be taxes. There are a lot of different policy changes that could impact consumer mindsets.”
Mr. Krakovsky, the EY consultant, echoed that sentiment.
“We don't see this as indicative of gangbusters growth in the year ahead,” he said. “It is cautious growth that is expected in 2025.”
