The National Retail Federation said Friday that holiday sales increased 3 percent to $626.1 billion in November and December, falling short of the trade group's forecast for 3.7 percent growth, as unseasonably warm weather and low prices weighed on results.
The news came shortly after the Commerce Department said retail sales posted an unexpected drop in December, falling 0.1 percent from the previous month. Compared with the prior year, December sales rose 2.2 percent, to $448.1 billion, according to the government data.
During the October to December period, total sales rose 1.8 versus the prior year, according to the department. Total sales for all of 2015 increased 2.1 percent, representing their weakest result since 2009, Reuters said.
"Make no mistake about it, this was a tough holiday season for the industry," said NRF President Matthew Shay. "Weather, inventory challenges, advances in consumer technology and the deep discounts that started earlier in the season and that have carried into January presented stiff headwinds."
"Despite these factors, the industry rallied, consumers responded and sales still grew at a healthy rate."
How the industry generated this growth, however, remained a top concern among analysts. They cautioned that profitability will likely take a hit when retailers start rolling out their fourth-quarter earnings results in coming weeks, thanks to aggressive discounts.
"Knowing that the topline growth was fueled by promotions tells us that the real number for us to focus on is ... the individual bottom-line results for retailers, because that's where we're going to see the real profitability numbers," said Steve Barr, PwC's U.S. retail and consumer leader.