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December Retail Sales Give Stellar Finish to 2023: 4 Picks
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In a surprising turn of events, December unfolded as a retail triumph, exceeding expectations and capping off a robust 2023. The Commerce Department's report revealed a 0.6% increase in retail sales, outperforming market expectations. This uptick was fueled by heightened consumer activity in clothing and accessory stores, along with a substantial rise in online shopping.
The resilience displayed by Americans in their spending spree defies speculations about a potential economic slowdown in the new year. This unexpected strength prompts a reconsideration of market expectations regarding the Federal Reserve's stance on interest rates. The report challenges the notion of an imminent rate cut in March, especially after recent positive indicators like strong employment and wage gains in December.
Economists had anticipated a pullback in consumer spending due to factors like credit card debt, delinquencies and lower savings. However, the report suggests that despite these challenges, spending remains robust. Strong job market conditions and rising wages are serving as key drivers, countering concerns about increased borrowing costs, tighter credit conditions and rising prices.
A Peek Into Retail Sales Numbers
The Commerce Department reported a sequential increase of 0.6% in U.S. retail and food services sales for December, reaching a total of $709.9 billion. This followed a revised reading of a 0.3% increase registered in November, highlighting sustained consumer activity. Remarkably, December's retail sales exhibited robust 5.6% year-over-year growth.
Delving into the specifics, motor vehicle & parts dealers experienced a substantial 1.1% sequential increase in sales. Food & beverage stores and general merchandise stores demonstrated modest growth, with increases of 0.2% and 1.3%, respectively. Building material & supplies dealers also contributed to the positive trend with a 0.4% rise in sales.
Fashion retailers saw a notable surge, with clothing & clothing accessories outlets experiencing a commendable 1.5% increase in sales. Sporting goods, hobbies, musical instruments & bookstores demonstrated resilience with 0.3% growth, while miscellaneous stores reported a commendable 0.7% increase. Non-store retailers, representing the online sphere, reported a significant 1.5% boost in sales, emphasizing consumer shopping habits.
Conversely, some sectors faced challenges. Electronics & appliance stores experienced a marginal decline of 0.3% in sales. Gasoline stations witnessed a more pronounced drop of 1.3% in receipts. Sales at health & personal care stores and furniture & home furnishing stores declined by 1.4% and 1%, respectively. Interestingly, food services & drinking places reported unchanged sales last month.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a potential pick. The company's ability to adapt, innovate and connect with customers positions it for a prosperous future. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion. Its strong brand portfolio, operational efficiency and regional strategy make it an attractive investment opportunity as it continues to navigate and thrive in the evolving retail landscape.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 713%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 15.1% from the year-ago period. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amazon.com, Inc. (AMZN - Free Report) is worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11.1% and 278.9%, respectively, from the year-ago reported figure. AMZN, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 54.9%, on average.
Investors can count on Target Corporation (TGT - Free Report) . This Minneapolis, MN-based company has been making multiple changes to its business model to adapt and stay relevant in the dynamic retail landscape. Target has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with a seamless shopping experience. These have been contributing to the top line.
The Zacks Consensus Estimate for Target’s current financial-year EPS suggests growth of 38.5% from the year-ago reported figure. TGT, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 30.8%, on average.
American Eagle Outfitters, Inc. (AEO - Free Report) is worth betting on. The company’s efforts to rationalize inventory and contain costs are paying off. The strong performance of key brands like American Eagle and Aerie, coupled with expansions into premium and activewear segments, indicates potential for growth. Its store designs and online enhancements demonstrate a commitment to improving the customer experience.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 5% and 43.3%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2, delivered a trailing four-quarter earnings surprise of 23%, on average.
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December Retail Sales Give Stellar Finish to 2023: 4 Picks
In a surprising turn of events, December unfolded as a retail triumph, exceeding expectations and capping off a robust 2023. The Commerce Department's report revealed a 0.6% increase in retail sales, outperforming market expectations. This uptick was fueled by heightened consumer activity in clothing and accessory stores, along with a substantial rise in online shopping.
The resilience displayed by Americans in their spending spree defies speculations about a potential economic slowdown in the new year. This unexpected strength prompts a reconsideration of market expectations regarding the Federal Reserve's stance on interest rates. The report challenges the notion of an imminent rate cut in March, especially after recent positive indicators like strong employment and wage gains in December.
Economists had anticipated a pullback in consumer spending due to factors like credit card debt, delinquencies and lower savings. However, the report suggests that despite these challenges, spending remains robust. Strong job market conditions and rising wages are serving as key drivers, countering concerns about increased borrowing costs, tighter credit conditions and rising prices.
A Peek Into Retail Sales Numbers
The Commerce Department reported a sequential increase of 0.6% in U.S. retail and food services sales for December, reaching a total of $709.9 billion. This followed a revised reading of a 0.3% increase registered in November, highlighting sustained consumer activity. Remarkably, December's retail sales exhibited robust 5.6% year-over-year growth.
Delving into the specifics, motor vehicle & parts dealers experienced a substantial 1.1% sequential increase in sales. Food & beverage stores and general merchandise stores demonstrated modest growth, with increases of 0.2% and 1.3%, respectively. Building material & supplies dealers also contributed to the positive trend with a 0.4% rise in sales.
Fashion retailers saw a notable surge, with clothing & clothing accessories outlets experiencing a commendable 1.5% increase in sales. Sporting goods, hobbies, musical instruments & bookstores demonstrated resilience with 0.3% growth, while miscellaneous stores reported a commendable 0.7% increase. Non-store retailers, representing the online sphere, reported a significant 1.5% boost in sales, emphasizing consumer shopping habits.
Conversely, some sectors faced challenges. Electronics & appliance stores experienced a marginal decline of 0.3% in sales. Gasoline stations witnessed a more pronounced drop of 1.3% in receipts. Sales at health & personal care stores and furniture & home furnishing stores declined by 1.4% and 1%, respectively. Interestingly, food services & drinking places reported unchanged sales last month.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a potential pick. The company's ability to adapt, innovate and connect with customers positions it for a prosperous future. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion. Its strong brand portfolio, operational efficiency and regional strategy make it an attractive investment opportunity as it continues to navigate and thrive in the evolving retail landscape.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 713%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 15.1% from the year-ago period. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amazon.com, Inc. (AMZN - Free Report) is worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11.1% and 278.9%, respectively, from the year-ago reported figure. AMZN, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 54.9%, on average.
Investors can count on Target Corporation (TGT - Free Report) . This Minneapolis, MN-based company has been making multiple changes to its business model to adapt and stay relevant in the dynamic retail landscape. Target has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with a seamless shopping experience. These have been contributing to the top line.
The Zacks Consensus Estimate for Target’s current financial-year EPS suggests growth of 38.5% from the year-ago reported figure. TGT, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 30.8%, on average.
American Eagle Outfitters, Inc. (AEO - Free Report) is worth betting on. The company’s efforts to rationalize inventory and contain costs are paying off. The strong performance of key brands like American Eagle and Aerie, coupled with expansions into premium and activewear segments, indicates potential for growth. Its store designs and online enhancements demonstrate a commitment to improving the customer experience.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 5% and 43.3%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2, delivered a trailing four-quarter earnings surprise of 23%, on average.