The retail industry’s report card for the critical holiday shopping season is in.
American shoppers surprised analysts, economists and even retail executives by spending more than expected in November and December. But a closer read shows that not all retailers are benefiting.
Retail sales during the holiday season increased 4 percent from a year earlier, according to data from the Commerce Department. Purchases of cars, clothes and electronics helped bolster sales.
Over the last week or so, some retailers have signaled how business went during the holidays — with more reports to come in February. Target’s November and December total sales rose nearly 3 percent from the prior year, pushed higher as people put more clothes and toys in their shopping carts. Abercrombie & Fitch said sales had exceeded expectations and predicted growth of 7 to 8 percent over the 2023 holiday shopping season.
Lululemon, the maker of $98 leggings and other athletic wear, said it anticipated sales growth of 11 to 12 percent in the fourth quarter. “I still see a consumer that’s healthy,” Calvin McDonald, chief executive of Lululemon, said in an interview.
For some retailers, though, customers did not seem in a mood to splurge.
Signet Jewelers, which owns Kay Jewelers, Zales and Jared, said its comparable sales would decline as much as 2.5 percent in the fourth quarter because of weaker-than-expected sales in the days leading up to Christmas. When it came to “fashion gifting,” customers “gravitated to lower price points even more than anticipated,” Joan Hilson, Signet’s chief financial and operating officer, said in a statement, and the company did not have enough of what shoppers were seeking.
Macy’s, which warned analysts in December that its customers were holding back, said sales were roughly flat during the fourth quarter. The department store chain is in a monthslong process of closing 66 of its 479 stores, from Philadelphia to Sacramento, with more to come through 2026. But it said comparable sales had increased at the Macy’s locations that it sees as its future, as well as Bloomingdale’s and the beauty chain Bluemercury, which it also owns.
Macy’s is not the only chain that is contracting. Kohl’s, which has had 11 consecutive quarters of declining sales, said it would shutter 27 “underperforming” stores by April. The department store chain has more than a thousand stores.
Since 2022, as inflation curtailed consumer spending and shoppers limited their visits to favored stores, foot traffic and sales have slowed. The bounce that the holiday season usually offers retailers was not able to save all of them.
In the last month, a number of struggling retailers — the fabric and crafts chain Joann, the Container Store and Party City — declared bankruptcy. Party City and Big Lots, which declared bankruptcy in September, are closing all of their stores.
“If there’s a company out there that was sort of praying for holiday to really save them, my guess is that it probably didn’t save them,” said Isaac Krakovsky, a retail sector leader at the consultancy EY, who is in frequent communication with retail executives. “It probably gave them enough time to limp along for a little further because of the promotional nature of holiday.”
The forecast for the U.S. economy also remains foggy. Some forecasters expect U.S. economic growth in 2025 to be around 2 percent, once adjusted for inflation, which would be a modest slowdown from roughly 2.5 percent growth in 2024. But the International Monetary Fund said on Friday that it expected U.S. economic growth to accelerate slightly this year.
Many analysts are reluctant to see the surprising strength of the holiday shopping season as an indication of how consumer spending might pan out in 2025, given the many uncertainties with the incoming Trump administration and how fiscal policies may affect buying decisions.
“There’s a question mark on what policies are announced in January that could make the consumer think twice before their spending,” said Mickey Chadha, a vice president at Moody’s Ratings. “It could be tariffs, it could be immigration, it could be taxes. There are a lot of different policy changes that could impact the mind-set of the consumer.”
Mr. Krakovsky, the EY consultant, echoed that sentiment.
“We’re not seeing this as an indication of gangbuster growth coming in the next year,” he said. “It’s cautious growth expected in 2025.”