The once battered retail segment and sector-related ETFs are reveling in the holiday festivities as holiday sales rose at their quickest pace since 2011.
The SPDR S&P Retail ETF (NYSEArca: XRT), the largest retail ETF, gained 1.3% Tuesday and increased 12.0% over the past three months.
According to Mastercard SpendingPulse, U.S. retail sales over the holiday period advanced at their best pace since 2011 on high consumer confidence and a robust job market, reports Suzanne Kapner for the Wall Street Journal.
Sales, which exclude big ticket items like automobiles, rose 4.9% from the period between November 1 through Christmas Eve, compared to a 3.7% gain for the same period last year. Dec. 23 ranked next to Black Friday in terms of spending, according to Mastercard data.
Additionally, Mastercard revealed E-commerce continued to drive gains, rising 18.1% over the period. The trend away from traditional department stores and apparel retailers to online shopping destinations should benefit the Amplify Online Retail ETF (NasdaqGM: IBUY), which is comprised of global companies that generate at least 70% of revenue from online or virtual sales.
“It started with a bang in the week leading up to Black Friday,” Sarah Quinlan, a senior vice president of marketing insights at Mastercard, told the WSJ, adding that retailers benefited this year from Christmas Day falling on a Monday, which allowed shoppers to scoop up last-minute purchases. “Overall, this year was a big win for retail.”
A broader group of consumers added to improved retail sales this year, compared to last year when spending was driven by high-income shoppers. The improved jobs market and rising wages may have helped drive the broader consumer spending spree, analysts and economist said.
“Fewer people are living paycheck to paycheck,” Chris Christopher, executive director of economic-research firm IHS Markit, told the WSJ. “There is a lot more spending from the lower- and middle-income groups, while the upper-income groups are splurging.”
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