The Grinch Stole Christmas from Brick and Mortar Retailers...But Online Sellers Are Smiling

Includes: AMZN, WMT
by: SA Editors

The housing slowdown and higher energy costs took their toll on holiday spending this year, with retail sales rising only 3% over last year. Sales were also hurt by the relatively warm temperatures, which cut into apparel sales. The last-minute weekend rush on December 23-24 gave the sector a 23% boost, but revenues were still the slowest they have been since 2002. Wal-Mart, which will issue a preliminary report on December's results this weekend, is forecasting a slim gain of "up to 1%." The S&P 500 Retailing Index remains stable, however, falling less than 1% since Oct. 31. Apparel fell behind overall retail during the holiday season, but no individual category did particularly well this year. Retailers are hopeful that the post-Christmas week will bring some cheer to the season as gift-card recipients come to stores to redeem their certificates. The only bright spot in the sector was online retail, with posting its best holiday season ever and Yahoo Shopping seeing a 34% rise in December over a year earlier.

• Sources: Bloomberg, Wall Street Journal, USA Today, MarketWatch
• Related commentary: U.S. Retail Sales Relatively Strong as Holiday Season Ends, Retailers' Heavy Discounting Should Pressure Q4 Margins, Holiday Retail Sales Falling Short
• Potentially impacted stocks and ETFs: Wal-Mart (NYSE:WMT), Federated Department Stores (FD), Target (NYSE:TGT), Inc. (NASDAQ:AMZN), Yahoo Inc. (YHOO). ETFs: Retail HOLDRs (NYSEARCA:RTH), Consumer Discretionary SPDR (NYSEARCA:XLY), Internet HOLDRs (NYSE:HHH), First Trust Dow Jones Internet Index (NYSEARCA:FDN)

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