Traders Try to Rationalize Poor Retail Sales

So much for easy comps. How disappointing were retail sales? Two metrics:

1) RetailMetrics started off the month estimating gains of 2.6 percent for November compared to the same period last year, but by the end of the month it was down to 2.2 percent. Final number: up 0.7 percent.

2) about 75 percent missed expectations; normally 60 percent beat expectations.

Bulls on the Street are straining their calculators to explain the disappointing November retail numbers. The favorites explanations:

1) everyone shopped online on cyber Monday, which does not count for November sales;

2) weather was warmer than usual;

3) sales were really weak going into Thanksgiving, but Black Friday weekend was encouraging (e.g. JC Penney said business improved after Thanksgiving, Target said comps were up mid single digits).

The first does not explain the weakness: the misses on some of these companies was very large and cannot be accounted for by just saying more shopped online in a single day.

Warmer weather may have been a modest negative.

Regardless: the bottom line is that consumers show up for big shopping events (back to school, Black Friday weekend) and disappear for the rest of the year.

Store notes: in one of the great retail battles of the year, Kohl's continues to outperform JC Penney. Kohl's reported a comp store gain of 3.3 percent, about in line with expectations, while JC Penney reported a decline of 5.9 percent, about in line with guidance of down 4 to 7 percent.

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