“It’s the weather’s fault.”
Prepare to hear this excuse a lot more in the coming days as one after another expectation of the “any minute now” economic rebound is missed.
In today’s instance we find that holiday retail sales, on which the punditry placed so much hope to finally show a recovering consumer, rose 2.7%, however offset by a plunge in store foot traffic, which tumbled by a whopping 14.6% according to ShopperTrak and wildly missing expectations of a 1.4% decline, a far cry from 2012’s 2.5% increase.
A big part of the drop was due to the shorter shopping period as retailers only had 25 days to encourage shoppers to spend compared to 31 days earlier, although an even bigger contributor was the pulling of holiday sales into November with early promotions starting at the earlest time in history. “Consumers took a break from shopping after Thanksgiving weekend, so retailers were pressured to offer deep discounts and promotions in the final week before Christmas to finish the holiday on a positive note,” said ShopperTrak founder Bill Martin. Naturally the weather was also blamed with a “cold snap” invoked to explain why shoppers stayed away from stores.
Still, since the drop in traffic did not result in an overall collapse in spending, this is hardly the full explanation. So ShopperTrak provided the following goalseeked justification: “It’s a result of more and more technology in the hands of the consumer, which allows them to virtually window-shop.” Reuters adds that many shoppers went online to make purchases, particularly during a spell of abnormally cold weather in many parts of the United States during the first two weekends of December.
One would expect then that online sales would have more than made up for the shortfall? One would be wrong: while online retail spending rose 10% to $46.5 billion in the November-December 2013 holiday season, according to comScore, this too missed expectations of 14% growth that the data firm had forecast.
But while the true state of the US consumer – already having drawn down on their savings and refusing to splurge on credit card purchases – remains unclear, what is clear is that in their scramble to lure shoppers, retailers cut prices so violently that margins in the fourth quarter will likely be a sight to behold once earnings are reported. Indeed, earlier today we got a feel for what the expect when troulbed chain J.C. Penney Co said that it was “pleased with its performance” during the holiday period. It refused to provide any justification or numbers to go along with its cryptic press release and as a result the company’s shares are currently down 7%.
As for online retailers, if Amazon’s persistent inability to generate profits is any indication which continues to be rewarded by the market, they have nothing to worry about especially if bottom line losses will be “made up with volume.”
Finally looking forward into Q1, one can expect more of the same: “ShopperTrak estimated on Wednesday that U.S. retail sales would rise 2.8 percent in the first quarter of 2014, while shopper traffic would fall 9 percent.”
Finally, for those who are into that sort of thing, here is ShopperTrak’s infographic on the holiday sales season:
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1K4q3c-taNw/story01.htm Tyler Durden