Sales projections for the 2015 holidays

The holiday season, defined as the months of November and December, represents one of the top-grossing periods for retailers. Sales during the period can account for as much as 20%–30% of the year’s total sales for some retailers.

How Will Retailers Fare This Holiday Season?

Economic background

Consumer spending has been cautious by and large over the course of 2015, except for automobile and restaurant sales. The US consumer has been intent on paring down debt levels. Discretionary spending hasn’t seen the same upside that one might expect in an environment of a recovering labor market, falling gas prices, and rising incomes.

2015 holiday projections

Retail sales are expected to see higher-than-average growth in this year’s holiday season. The National Retail Federation (or NRF) anticipates 3.7% year-over-year growth in 2015, compared to the ten-year average of 2.5% annual growth.

Retail sales are expected to reach $630.5 billion this holiday season (excluding gas, restaurant, and automobile sales). Last year, retail sales during the season rose 4.1% to just over $600 billion.

E-commerce (electronic commerce) sales growth is projected to be between 6%–8%, with online sales reaching $105 billion in the months of November and December. About ~46% of holiday shopping and browsing is expected to take place online. 21.4% of smartphone users are planning to shop for merchandise using their devices, the highest number on record.

The SPDR S&P Retail ETF (XRT) provides exposure to various retailers, including specialty retailers such as Tiffany & Co. (TIF) and Foot Locker (FL), mass merchandisers such as Wal-Mart (WMT), Target (TGT), and Costco (COST), online retailers such as Amazon (AMZN), and apparel retailers such as L Brands (LB) and The Gap (GPS). Together, these companies constitute ~8% of the holdings in XRT.

In the next article, we’ll discuss the major implications for retailers from the NRF’s Holiday Consumer Spending Survey.

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