What analysts are seeing in retail ahead of December holiday season

Retail names have been one of the better performing groups so far in November, especially important that it is ahead of the critical December holiday season. The XRT retail ETF is up 8% year-to-date, more than double the S&P 500’s 3.7% return.

And while Amazon is up 41% YTD, the broader retail group has more momentum heading into the holiday season. Since the end of October, XRT is up 4.2% compared to Amazon’s +0.2%.

See also: Tearing down and building up: Amazon wants Deliveroo, opens 4-Star store

See, retail isn’t dead.

So what do Wall Street analysts think?

Analysts have pointed out a few things paying into the retail’s recent run:

  • Consumers: strong consumer spending heading into the holiday shopping season. Last quarter’s GDP growth was driven by consumer spending (outpacing income gains, which means people are pushing their purchases forward). That’s probably a positive for this upcoming holiday season
  • Weather: It’s cold. But not too cold, where people don’t want to or can’t go out in a Polar Vortex. So those fleece vests and Patagonia fleece pullovers are probably selling well.
  • Extra holiday shopping day: Christmas is on a Tuesday, which means there’s an extra shopping day between Thanksgiving and Christmas compared to last year. That’s a bigger deal than you think. An Adobe Analytics study (Reuters) said that extra day will provide a $284M sales boost. To just online retailers. And online retail is only about 10% of all transactions.

You would be bold to push all your chips toward Macy’s and away from Amazon over the long-run, but people are actually out buying stuff at physical stores. Retail has a little more life than it gets credit for.

Cover photo: Lukas Schlagenhauf, Flickr Commons

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