Solid growth in retail sales for the November and December holiday shopping season. Retail profits not so much.
For November, advance estimates show retail and food services sales climbing 3.7% from November 2015, according to the U.S. Census Bureau. For December, preliminary forecasts from economists at Kiplinger see sales growth of 4.1% in 2016. That’s not as good as the 4.8% growth posted in 2014, but it would be a big step up from the 2.5% growth in 2015.
Unfortunately, this better growth looks to be accompanied with deep, deep discounting. Online orders using promotions jumped by 131% year over year for the period between November 1 and December 18, according to a study of $4 billion in e-commerce sales by Dynamic Action. Deals offering as much as 30% off or “Buy one; Get one free” made up between 51% and 80% of all online transactions depending on the day studied. Â Retailers that have been consistently more promotional than last year include Wal-Mart (WMT), Coach (COH), and Michael Kors (KORS).
