Why did holiday sales miss?

Hurt by unforeseen weather events across the country and an “extreme deflationary retail environment,” the National Retail Federation (NRF) said holiday sales in 2015 increased three percent to $626.1 billion, falling short of its target of 3.7 percent.

The figure, including online sales, covers the November-December period and compared with a gain of 4.1 percent in the same period in 2014.

“Weather, inventory challenges, advances in consumer technology and the deep discounts that started earlier in the season and that have carried into January presented stiff headwinds as retailers competed with one another and their own bottom line,” said Matthew Shay, president and CEO of NRF, in a statement. “Despite these factors, the industry rallied, consumers responded and sales still grew at a healthy rate, which is a huge testament to the resilience, knowledge and expertise of our retail leadership.”

Modest gains were widely forecast for the holiday with lower gas prices and a strengthening economy offsetting meager wage gains and higher rent and health-care costs.

Weather has already been reported as an issue in the EPS downgrades of Macy’s, Gap and others in the apparel space. Planalytics calculated that specialty apparel stores lost $572 million during the final two months due to the weather.

A lackluster line-up in consumer electronics also hurt. According to The NPD Group’s Weekly Tracking Service, revenue for the Consumer Electronics industry declined 4.8 percent during the nine weeks ended Jan. 2. Best Buy, which last Thursday reported a 0.8 percent decline in November-December domestic sales, indicated the mobile phone category was particularly below expectations.

Earlier promotions by some in October are believed to have pulled sales from the November-December period. With restaurant sales and travel spending strong, some felt more consumers were choosing experiences rather than traditional gifts.

A bright spot was online. NRF estimated that online sales jumped nine percent to $105 billion, above the association’s forecast of 6-8 percent growth.

• Retail Holiday Sales Increase 3 Percent – National Retail Federation
• Holiday sales fall short of forecasts: NRF – CNBC
• Weather and lower prices dampen U.S. holiday sales growth: NRF – Reuters
• Holiday sales disappoint: Grew a less-than-expected 3% – USA Today
• Macy’s Was Not Alone. Retailers Had A Harsh Holiday Season – Fortune
• Best Buy Reports Holiday Revenue Results – Best Buy