United States consumer confidence was high enough to get shoppers into stores this holiday season, but not all retailers managed to take advantage.
The numbers are in and over the all-important year-end sales period, consumers in the United States spent enough to give retailers and restaurants a happier holiday season than they had last year, but not quite as much as stores may havehad hoped for.
The Thomson Reuters Same Store Sales (SSS) Index points to 1.9 percent growth for the fourth quarter of 2017. While that’s stronger than the previous year’s 0.8 percent result, it’s still below the 3 percent “healthy” mark, suggesting consumer spending was somewhat restrained. The Thomson Reuters consumer confidence index indicates consumers are feeling good about their economic situation – and spending their discretionary income – but the average holiday discount (40 percent) wasn’t much different than the average discount offered in previous months (33 to 45 percent). That may have resulted in consumers keeping their wallets and purses closed because they didn’t think the offers they were seeing were good enough.
- The Internet sales sector continues to have the one of the highest earnings growth rate (19.4 percent) of any sector. On the other hand, the Leisure Products sector has the lowest growth rate (-67.5 percent) of any sector.
- All restaurant sectors are doing better than last year. The quick-service sector is on top with a robust 3 percent SSS estimate, nicely above last year’s 1 percent SSS result. McDonald’s and Starbucks in particular stood out as winners, reporting 4.3 percent and 3.2 percent SSS growth, respectively.
- While the Textiles, Apparel and Luxury Goods sectoron the whole is floundering, some clear winners emerged. They include Aerie, a swimsuit and intimates offshoot of American Eagle that is popular with Millennial women (25.6 percent SSS growth) and Lululemon Athletica, which continues to be the first name the athleisure market (8.4 percent SSS growth).
- A strong housing market helped boost the bottom line at West Elm, Williams-Sonoma’s trendy and moderately priced home goods chain (10.4 percent SSS growth) and do-it-yourself behemoth Home Depot (7.5 percent result above its 6.5 percent SSS estimate).
- The decline of the shopping mall format continued to be bad news for toy store Build-A-Bear, women’s clothier Chico’s and venerable department store chain Sears. These three retailers are based on the mall format and rely largely on foot traffic. Accordingly, they suffered -7.8, -6.5 and -16.4 percent SSS results, respectively.
A version of this article originally appeared on Inside Financial & Risk.