Holidays boost December US retail spending; 1 new bankruptcy

US retail sales once again surpassed expectations in December, bolstered by buoyant holiday spending.

The boost to retail and food services sales amounted to 0.6% growth from the previous month, according to US Census Bureau data released Jan. 17. Economists had anticipated a more subdued increase of 0.4% for December, according to data compiled by Econoday.

Bankruptcies among retailers remained subdued amid strong holiday sales and an unchanged median default risk across retail categories, with a single filing between mid-December and mid-January.

Retail sales

US retail and food services sales totaled $709.89 billion in December, up from a revised $706 billion in November, according to advance estimate data published by the Census Bureau. December sales were up 5.6% year over year, while sales for 2023 were 3.2% higher than 2022 sales.

Department stores registered a 3.0% increase in sales over the previous month, while all other categories registered changes of 1.5% or less from November sales figures.

Other than furniture stores, building material and garden equipment retailers, gasoline stations and department stores, all business categories' sales rose year over year.

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Food services and drinking places expanded their sales by 11.1% on an annual basis, while electronics and appliance stores and health and personal care stores both grew their sales by 10.7%.

Bankruptcies

Women's clothing retailer Anne Fontaine USA Inc. filed for bankruptcy in mid-January as the only retailer to do so over the month ended Jan. 17.

In total, 26 retailers sought bankruptcy protection in 2023, an uptick compared to the two prior years but below annual bankruptcy filings for 2015 through 2020.

Default risk

Median default risk for all retail categories amounted to 2.5% as of Jan. 17, unchanged from mid-December, according to Market Intelligence's Market Signal Probability of Default model.

The default risk of home improvement retailers grew to 4.6% from 1.4% a month earlier, while the household appliances category saw an increase to 2.5% from 1.4%.

Computer and electronics retailers and footwear retailers registered the greatest declines in default risk, dropping to 2.6% from 3.8% and to 0.2% from 1.2%, respectively.

Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.