The 2024 holiday season turned out to be a blissful one for retailers, as consumers demonstrated robust spending. As per the data released by the U.S. Census Bureau, core retail sales climbed 4% year over year to an all-time high of $994.1 billion. This impressive growth exceeded the National Retail Federation’s (“NRF”) forecast, which had predicted an increase between 2.5% and 3.5%.

NRF Chief Economist Jack Kleinhenz highlighted the robust holiday performance as a clear sign of a rebound in consumer spending, reflecting the solid growth of the U.S. economy. Kleinhenz noted that spending patterns returned to pre-pandemic levels, setting a positive tone for 2025. Despite a shorter holiday shopping calendar that favors online shopping, the season also saw a resurgence in in-person shopping and a focus on early purchasing.

As Americans stepped up spending, retailers such as Abercrombie & Fitch Co. ANF, Amazon.com, Inc. AMZN, Costco Wholesale Corporation COST and Walmart Inc. WMT reaped benefits.

Consumers defied challenges spurred by a resilient labor market and steady wage growth. Retailers capitalized on the season with compelling promotional strategies, enticing shoppers to spend on big-ticket items and essentials alike. The Federal Reserve's strategic approach to rate cuts and easing inflation allowed consumers to manage their budgets better.

Breaking Down Holiday Sales Numbers

Breaking down the specifics of the November-December period, year-over-year growth was witnessed across seven out of nine categories. Online and other non-store sales led the way, surging 8.6%, as digital shopping remained a preferred option. Furniture and home furnishing stores saw a 5.6% increase, while electronics and appliance stores posted a solid 3.7% rise.

Health and personal care stores experienced a 3% boost, highlighting continued interest in wellness products. Clothing and clothing accessory stores recorded a 2.8% gain, supported by a return to in-person shopping. General merchandise, as well as grocery and beverage stores, posted modest growth, rising 2.4% and 2.1%, respectively.

However, sales at building materials and garden supply stores, as well as sporting goods stores, remained flat compared to the previous year.

Past-Year Stock Price Performance of ANF, AMZN, COST & WMT

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4 Prominent Retail Stocks

Abercrombie & Fitch: Expanding Appeal With New Product Lines

Abercrombie & Fitch stands out as a strong investment choice. The company excels in integrating digital and physical retail channels, offering a seamless shopping experience and driving higher customer satisfaction and loyalty. Strategic marketing initiatives, particularly targeted campaigns in key markets, have been effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. ANF announced an upward revision in its net sales outlook for the fourth quarter, attributing to a successful holiday sales season. The company now expects fourth-quarter net sales growth to range between 7% and 8%, up from the prior forecast of 5% to 7%.

This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids has a trailing four-quarter earnings surprise of 14.8%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 15.1% and 69.4% from the year-ago period. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon: Pioneering E-commerce With Advanced AI & Automation

Amazon is also worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.

The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 10.9% and 82.4%, respectively, from the year-ago reported figure. AMZN, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 25.9%, on average.

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Costco: Membership Model a Key Growth Driver

Costco has navigated market ups and downs effectively, driven by strategic investments, a customer-centric approach, merchandise initiatives and a strong emphasis on memberships. By identifying untapped markets and tailoring offerings to customer preferences, Costco has deepened its market presence. The company’s high membership renewal rates, efficient supply chain management and bulk purchasing power ensure competitive pricing and foster strong customer loyalty.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 7.2% and 11.8%, respectively, from the year-ago period’s actuals. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 2%, on average.

Walmart: Digital Transformation Accelerates Market Reach

Walmart has been working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.

The Zacks Consensus Estimate for Walmart’s current financial-year sales and EPS suggests growth of 4.8% and 11.7%, respectively, from the year-ago reported numbers. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 9.3%, on average.

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