After a sluggish Q1 with flat earnings on 3.3% revenue growth, retailers started showing strength from Q2. The improvement was far from great as earnings rose 2.6% on 5.5% higher revenues and some sector bellwethers lowered their guidance. But the market showed sure signs of recuperating.
The recovery was evident in Q3 as well. Per the Zacks Industry Trend, the quarter should see 1.7% advancement in earnings while Q4 earnings are expected to jump as much as 4.9%. Meanwhile, U.S. consumer confidence touched a seven-year high in August reinforcing the slow-but-steady recovery.
In fact, consumer confidence rose for the fourth successive month helped by improved employment levels, decent housing numbers and a still-low interest rate environment (read: Solid August Retail Sales Show Economic Growth).
If these were not enough, the National Retail Federation (NYSE: NRF), together with the International Council of Shopping Centers, recently declared their expectation for all-important holiday sales. As a respite to retailers, the organization estimated a 4.1% jump in retail sales during this holiday season (November and December), a modest increase from last year's 3.1% sales rise. However, NRF does not consider auto, gas and restaurant sectors.
NRF noted that average holiday sales have improved 2.9% (a year) in the last 10 years, including the latest estimates. Retailers generate about one-fifth of annual sales during this period when people are in a mood of revelry. Holiday sales might cross the 4% benchmark for the first time in three years, as noted by NRF (read: Retail ETFs Surging on Improved Q2 Earnings).
Moreover, per Reuters, the improvement in holiday sales will be supported by wealthy buyers. Otherwise, consumers, who have just seen ...
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