Heading into Thursday's batch of retail sales reports, expectations are high that retailers will report their strongest sales in four years. However, as BJ's Wholesale's report showed Wednesday, there are sure to be some misses here and there.
One area to watch are department stores. MasterCard Advisor'sSpendingPulse report showed weakness in the department store group, which includes names such as Saks, Nordstrom , Macy's , J.C. Penney's and Kohl's.
That report also showed strong sales of apparel.
BMO Capital Markets analyst John Morris said in his retail sales preview that he expects the projected winners for the Holiday season are Limited, Abercrombie and Fitch, and the Gap, while Aeropostale and Pacific Sunwear are the laggards.
In the group of retailers that Morris covers promotional activity was fierce. His promotional activity index, which tracks mostly specialty apparel retailers, showed that discounts in December were about 5 percent higher than last year for the group.
So here's a list of what analysts are expecting, to help sort through the naughty and the nice:
A key question to examine is how many of these promotions were baked into the sales plan. The answer may come out in tomorrow's sales reports if companies are raising or lowering earnings forecasts.
One trend that could have helped offset the margin hit from discounts was a greater shift to online sales, which often carry a higher margin.
ComScore reported retail spending online for the November to December holiday season reached $32.6 billion, up 12 percent from last year and a record high for this season.
According to ComScore's measurements, CyberMonday was the first online spending day to exceed $1 billion in sales, but eight days of the holiday shopping season surpassed $900 million in sales.
The other thing everyone is wondering is whether or not these strong sales will continue in 2011. Investors will no doubt be looking to see what retailers have to say on that topic.
However, consumers have clearly started to satisfy some of the pent-up demand that had been building. If consumers continue their current pattern, investors should expect consumers to continue to spend when there is a clear reason to shop, and then keep spending in check when there is not.
Still, some people expect that weak sales from discounters such as BJ's Wholesale, as well as Family Dollar's earnings shortfall are signs that consumers are ready to start trading up and shopping again.
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