The retail industry is about to get a big boost from Republican tax cuts, setting the sector up “exceptionally well” in the new year, according to one of Wall Street’s biggest banks.
Barclays raised its rating on Target citing numerous benefits for the retail sector because of the tax overhaul. Macy’s reported 1.1 percent growth in same-store sales during that period, led by increased demand for active apparel, shoes, dresses and coats. For e-commerce companies like Alibaba and Amazon, online spending grew 11.5 percent during the holidays to $138.4 billion.
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- Alibaba’s GMV remains solid. GMV or gross merchandise value is defined as the total value of transactions made across the company’s marketplace.
- Alibaba serves about 80% of the Chinese e-Commerce market where population density is very high.
- Alibaba completed many acquisitions over the past year and while these acquisitions are augmenting its key capabilities and enabling it to expand both in China and internationally, integration risks remain. Moreover, the acquired businesses bring additional costs that are likely to add to its costs in the near term.
- Macy’s sustained focus on price optimization, inventory management, merchandise planning, and private label offering are the primary catalysts, facilitating in meeting customer-oriented demand and improving in-store shopping experience.
- Macy’s had earlier announced slew of measures revolving around store closures, cost containment, real estate strategy and investment in omnichannel capabilities. The company has closed 81 Macy’s stores, as a part of its planned closure of about 100 stores announced in August 2016, and plans to shutter about 19 more stores.
- Amazon.Com is one of the largest e-commerce companies in the world. Although the primary product line was books at first, the company rapidly diversified into a host of other product categories.
- Amazon keeps its retail business very hard to beat on price, choice, and convenience with the help of a solid loyalty system in Prime and its FBA strategy
- Amazon is the leading provider of cloud infrastructure as a service to enterprise customers. The Amazon Web Services (AWS) business as it is called generated revenues of $4.6 billion in the third quarter, growing at over 40% year over year in each of the last five quarters.
- Target continued with its upbeat performance in fiscal 2017, as reflected from its better-than-expected third-quarter results. The company’s strategic endeavors, turnaround plan as well as improved traffic trends remain the driving factors
- Target’s comparable sales rose 3.4% in the combined November/December period buoyed by healthy store comps, robust traffic and sturdy digital sales, thereby prompting management to lift view.
Overall growth over the recent holidays
Americans spent more than expected this holiday season, fueling the strongest growth in holiday retail sales since the end of the Great Recession. Holiday sales rose to $691.9 billion in November and December, marking a 5.5 percent increase from the year before, according to the National Retail Federation. Analysts commended that it represented the best holiday spending performance since 2005.
“Growth more than surpassed expectations, even though we’re seeing a structural shift in the industry as shoppers move online.”
- The nation’s unemployment rate is at a 17-year low
- Wages are inching up
- Online spending grew 11.5 percent during the holidays to $138.4 billion.
“The market conditions were right, retailers were doing what they know how to do, and it all worked,” Jack Kleinhenz, the NRF’s chief economist, said in a statement. “The economy was in great shape going into the holiday season, and retailers had the right mix of inventory, pricing and staffing to help them connect with shoppers very efficiently.”
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