It has been a confusing few weeks for followers of the retail sector. A mix of disappointing earnings (See Best Buy, J.C. Penny’s and Sears) along with pockets of luxury strength plus strongly trending auto sales has created a jumble. Let’s see if we can make some sense of the entire mess.
Let’s start with the tales of the American consumer’s demise. The early read from the National Retail Federation (You remember them) was for retail sales to drop 2.7% on Black Friday, and for gloomy holiday sales. Well, they reported this week that holiday sales rose 4.6% year-over-year (with the caveat I have no clue what their methodology actually is). A nearly 5% increase is not exactly a gloomy sales season. This is consistent with Morgan Housel’s claim that everything is doing much better than a few years ago and no one is happy about.