Retailers appear to have reason to celebrate, as holiday spending rose 8.5% compared with a year ago, according to Mastercard SpendingPulse.
The gain was less than Mastercard had predicted, but it was the biggest increase in 17 years. Some are concerned that a strong holiday season could lead to a more challenging January and February.
Oliver Chen, a retail analyst for Cowen, said on CNBC that he was cautiously optimistic because traffic has decelerated a little in December.
Chen said that he still has some expectations for the industry. Consumers are weighed down by inflation and the omicron variant. He said that supply chain challenges may cut into profits if shoppers stop buying goods at the wrong time and retailers increase the number of markdowns.
The peak shopping season is just starting to be understood by retailers and investors. The data from Mastercard is the first to be looked at. In-store and online retail sales are tracked by the company.
Mastercard says that retail sales exceeded pre-pandemic levels this holiday, with total sales increasing 10.7% compared with the same time in 2019. In-store and online sales both increased over the two-year ago period.
Online shopping has become more meaningful for shoppers since the Pandemic. Mastercard says e- commerce sales increased from 2020 to 2021. Online sales made up nearly 21% of total retail spending during the holiday season, roughly in line with the year-ago period and up from 14.6% in 2019.
Retail categories shined. Sales of apparel and jewelry increased by 42% and 32%, respectively, in the year-ago period. They were up 29% and 26.2% when compared with the holiday season in 2019. The year-ago period saw a decline in electronics sales.
Walmart, Target and other retailers are better positioned because they cut across merchandise categories and have online options, such as curbside pickup and home delivery, as people look for convenient and safe ways to shop. Walmart and Target shares were both up less than 1% on Monday.
He said that luxury retailers have benefited from less price sensitive consumers who are splurging on earrings, handbags, pricey furniture and more. Both Brilliant Earth and RH were down in trading Monday.
Macy's and Kohl's are appealing because of their performance. Macy's stock was up more than 3% on Monday, while Kohl's stock was up 2%. Macy's is up 131% year-to-date, after a tough year for department store stocks in 2020. Since the beginning of the year, the store has gained more than 25%.