2024 Holiday Shopping Season Surges as Retailers Thrive

The 2024 holiday season was a lucrative period for retailers, with consumers showing strong spending habits. According to the U.S. Census Bureau, core retail sales rose 4% year over year, reaching a remarkable $994.1 billion. This growth outstripped the National Retail Federation’s (“NRF”) expectations, which had estimated an increase of just 2.5% to 3.5%.

NRF Chief Economist Jack Kleinhenz pointed out that this strong holiday performance signals a recovery in consumer spending, aligning with the ongoing growth of the U.S. economy. Spending patterns have returned to levels seen before the pandemic, creating a positive outlook for 2025. Although the holiday shopping time frame was shorter and leaned more towards online purchases, there was a notable revival in in-person shopping and early buying habits.

Retailers like Abercrombie & Fitch Co. ANF, Amazon.com, Inc. AMZN, Costco Wholesale Corporation COST, and Walmart Inc. WMT benefitted from the increased consumer demand.

Despite economic challenges, consumers took advantage of a strong labor market and steady wage growth. Retailers implemented effective promotional strategies, encouraging shoppers to spend on both luxury items and everyday necessities. The Federal Reserve’s thoughtful rate cuts and easing inflation enabled consumers to spend within their means.

Analysis of Holiday Sales Performance

Looking at the holiday period of November to December, there was notable year-over-year growth in seven out of nine retail categories. Leading the charge were online and non-store sales, which jumped 8.6%, proving digital shopping remains a preferred choice. Furniture and home furnishings stores experienced a 5.6% increase in sales, while electronics and appliance stores notched a 3.7% rise.

Health and personal care stores recorded a 3% growth, showing ongoing interest in wellness products. Clothing and clothing accessory stores saw a 2.8% increase, aided by more consumers shopping in person. General merchandise and grocery and beverage stores also exhibited modest growth, rising 2.4% and 2.1%, respectively.

In contrast, building materials and garden supply stores, as well as sporting goods stores, showed flat sales compared to the previous year.

Stock Performance of Major Retailers: ANF, AMZN, COST & WMT

Image Source: Zacks Investment Research

Spotlight on Four Retail Giants

Abercrombie & Fitch: Elevating Brand with New Offerings

Abercrombie & Fitch has positioned itself as a solid investment choice. The brand excels at merging digital and physical shopping experiences, which enhances customer loyalty. Targeted marketing campaigns have effectively increased brand awareness. The launch of new product lines has expanded the brand’s reach. Following a successful holiday season, ANF revised its fourth-quarter net sales growth projection to 7% to 8%, up from its previous estimate of 5% to 7%.

As a leading global retailer of clothing for all ages, Abercrombie & Fitch has an average trailing four-quarter earnings surprise of 14.8%. According to Zacks Consensus Estimates, the company expects financial-year sales and EPS to grow by 15.1% and 69.4%, respectively, compared to last year. ANF holds a Zacks Rank #1 (Strong Buy).

Amazon: Leading the Charge in E-commerce

Amazon remains a strong player in the retail sector, credited with its expansive e-commerce platform and efficient delivery services. The Prime membership program is crucial to Amazon’s success, as it not only fosters customer loyalty but also generates stable income through subscription fees.

The Zacks Consensus Estimate indicates that Amazon’s current financial-year sales and EPS should increase by 10.9% and 82.4% year-over-year, respectively. AMZN holds a Zacks Rank #2 (Buy) with a four-quarter earnings surprise average of 25.9%.

Costco: Growth Through Membership Loyalty

Costco has adeptly navigated market fluctuations, benefiting from strategic investments and a focus on broadening its customer base. The company’s impressive membership renewal rates and effective supply chain strategy enable Costco to offer competitive pricing, reinforcing strong customer loyalty.

According to Zacks Consensus Estimates, Costco expects financial-year sales and EPS to grow by 7.2% and 11.8%, respectively, from the previous year’s figures. It also holds a Zacks Rank #2 with a four-quarter earnings surprise of 2%.

Walmart: Innovating in Digital Space

Walmart is enhancing its market presence through strategic investments in e-commerce. This includes acquisitions, partnerships, and upgrades to delivery and payment systems. The company aims to diversify its product offerings while also innovating its supply chain with better capacity and advanced technologies.

Walmart’s financial-year sales and EPS are estimated to grow by 4.8% and 11.7%, respectively, compared to last year’s data. The company holds a Zacks Rank #2, with a trailing four-quarter earnings surprise of 9.3%.

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