Holiday hangover hits retail

Turns out Santa showed up this year, but with a strict no-splurging policy.

Some retailers shared early holiday updates today, revealing a pivotal shopping season that failed to impress. Birkenstock, Savers Value Village, and Five Below were among those reporting ahead of the ICR conference in Orlando, with results largely confirming expectations: a few standouts, but no broad-based boost in consumer spending.

Here’s how some of the more notable names shook out:

• Abercrombie & Fitch posted “record” quarter-to-date sales, but trimmed the top end of its full-year outlook, cutting expectations for sales growth, operating margin, and EPS. Management said holiday demand was solid across its brands, but the numbers hinted at slowing momentum after years of strong growth. Shares plummeted 17.69%.
• Urban Outfitters, too, delivered “record holiday sales,” with total net sales rising 9% year over year in the two months ending December 31. Growth was broad-based across brands, with comparable sales rising 9% at Urban Outfitters, 5% at Free People, and 3% at Anthropologie, while FP Movement led the pack with an 18% jump. The biggest standout, however, was its Subscription segment, including its Nuuly clothing rental business, where net sales jumped 43%. Despite the strong performance, shares still fell 11.59%.
• American Eagle Outfitters followed a familiar pattern, calling the holiday period a “record” season after beating expectations, with quarter-to-date comparable sales up between 8% and 9%, and Aerie comps rising “in the low twenties.” The strong performance led the company to raise its fourth-quarter operating income outlook. But, like its peers, the stock still fell 3.54%.
• Lululemon said its fiscal fourth-quarter results are tracking toward the high end of prior guidance, signaling a strong finish to the holiday period. The update comes as the company prepares for a leadership change, with CEO Calvin McDonald set to depart at the end of this month and the search for a successor underway, marking a much-needed reset as competition in the athleisure space intensifies. Shares rose 2.52% today.

Retail reality check

The holiday season broke records across much of retail, but stocks are still sliding, a sign that confidence in outlook is weakening. While the National Retail Federation projects healthy annual sales growth of 3.7% to 4.2% from November and December, much of that gain is likely driven by higher prices rather than increased demand. After accounting for tariff-related price hikes, analysts see little real volume growth, leaving consumer and retailer sentiment cautious.

That caution is weighing on the rest of the sector, too. Shares of Gap, Under Armour, Macy’s, and Kohl’s all moved lower today, suggesting investors are treating the mixed holiday read-through as a warning sign rather than a buying opportunity—for now.—SY