Holiday sales increase 4 percent: NRF

Weaker-than-expected retail sales data shook investor confidence on Wednesday, as sales failed to reflect the boost from a steep drop in gasoline prices that many were expecting.

Still, while the figures released by the Commerce Department and the National Retail Federation were a bit of a "head-scratcher," analysts agreed the market shouldn't panic.

Shoppers push their carts through the checkout line at a Target store in Chicago.
Andrew Nelles | Reuters
Shoppers push their carts through the checkout line at a Target store in Chicago.

Despite a confluence of factors that contributed to weakness in December relative to November—including an earlier start to the holiday season—the overall monthly figures were largely in line with what experts were predicting.

"The surprise was that, even stripping out gasoline, autos and building materials, sales fell by 0.4 percent [month over month]," Capital Economics' Paul Diggle said.

Sales miss forecasts, but...

According to the National Retail Federation, holiday sales rose 4 percent to $616.1 billion in November and December, slightly below its forecast for 4.1 percent growth. Still, it marked the first time since 2011 that holiday sales increased more than 4 percent, according to the trade group.

The news followed a Commerce Department report that total retail sales in December rose 3.2 percent compared to 2013. That included retail trade sales that were 2.6 percent higher year over year.

Read MoreRetailers are closing up shop. Here's why...

The government data also showed that total retail sales for the October-December period were up 4.1 percent from the previous year.

Traders, however, were shaken by the fact that overall retail sales were down 0.9 percent from November.

"Contrary to expectations, shoppers didn't take advantage of the boost to real incomes from lower gasoline prices to head out in force at the end of the holiday shopping season," Diggle said.

Ken Perkins, president of Retail Metrics, said December's numbers were "a little bit concerning," as even the white knight online sales category wasn't as strong as anticipated. Still, things aren't as bad as the headline number suggests, he said.

Pro: Retail numbers just a blip
Pro: Retail numbers just a blip   

Perkins attributed part of December's weakness to the fact that retailers started pushing their holiday deals as early as October, pulling sales forward. He added that much of the savings associated with the dramatic drop in gas prices is likely to be felt moving forward, after consumers pay off some of their debt.

That was a popular opinion among analysts at the NRF's annual show in New York City, which ended Wednesday. According to Craig Johnson, president of Customer Growth Partners, the gasoline price decline was the greatest on record during the holiday period and provided gross savings of $13 billion.

"There's a lag effect," Perkins said. "Heading into the first half of 2015 we should see more of a benefit from it."

Read MoreA happy holiday: Sales top ShopperTrak forecast

A recent survey by the International Council of Shopping Centers supports that opinion. According to the trade group, about 42 percent of the 1,000 U.S. adults polled said they feel they have more money to spend because of lower gas prices.

For December, however, Kantar Retail senior economist Doug Hermanson said that most of consumers' savings at the pump were offset by higher food prices. People are also spending a larger chunk of cash on things that government data don't capture, such as data plans and cable, Perkins said.

He added that shoppers remain shell-shocked from the recession, and simply don't spend as freely as they once did, and stagnant wages are a headwind.

"The one huge fly in the ointment still is that salary and wage gains [are] not materializing," he said.

Riding momentum into 2015

Despite these challenges, Perkins said he sees more momentum heading into 2015 than he has since the recession. Over the past few days, 36 retailers have provided holiday sales or guidance—nine of which guided higher and only seven projected lower.

Of the 122 total companies Retail Metrics tracks, fourth-quarter earnings growth is expected to come in at 7.5 percent, which has held relatively steady.

At the ICR XChange Conference in Orlando this week, several retailers reported that after seeing a lull in early December, business picked up toward the end of the month. That momentum has continued into January, analysts said. Record gift card sales should also provide a boost in January, as these sales aren't logged until the cards are redeemed.

"In general, our companies were relatively optimistic driven by better-than-expected holiday sales results," Stifel Nicolaus analyst Richard Jaffe wrote in a note to investors.

Read MoreLong live the Web: Online sales top expectations

Jack Kleinhenz, chief economist for the NRF, emphasized that while December's sales were "disappointing," the overall holiday figure is the best since the group has seen since 2011.

"We remain positive about the future and expect to see consumers continue to benefit from the extra income gained from an improved job market and the dramatic fall in gas prices," Kleinhenz said.

NRF's figures come less than a week after ShopperTrak reported holiday sales grew 4.6 percent. That was higher than the analytics firm's forecast for an increase of 3.8 percent, and the strongest growth since 2005, when sales grew by 5.2 percent.

ShopperTrak compiles its data from retailers' sales logs, though it doesn't account for online sales. It works with more than 1,000 retailers, malls and entertainment venues.