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As Holiday Shopping Beckons, Retailers Ratchet Down Their Expectations


  • As Black Friday and Cyber Monday loom, mixed forecasts heighten holiday sales uncertainty.
  • Most retailers have taken a cautious approach to their expectations.
  • Inflation-weary consumers likely will target discounts to an even greater degree than usual.

Holiday spending forecasts appear about as uncertain as the U.S. economy in recent months, but those closest to the action—retailers—seem resigned to a somewhat subdued shopping season.

Retail giants Walmart (WMT) and Target (TGT) recently warned they expected weakening sales in this year’s fourth quarter, echoing concerns expressed from a variety of their smaller rivals. That includes electronics retailer Best Buy (BBY), which Tuesday sliced its full-year sales forecast.

As the year’s biggest shopping weekend looms, those concerns seemingly contradict various surveys predicting increased holiday spending.

They’re more in line, though, with a U.S. economy expected to produce less than half the rate of growth as the year ends as it did in the third quarter, possibly foreshadowing a mild recession in early 2024.

Mixed Forecasts

Consulting firm PwC predicts holiday spending will rise 7% compared with a year ago, buoyed by a 12% increase in travel-related spending. Rival consultant Deloitte predicts an even bigger increase in holiday spending, up 14% from last year and surpassing pre-Covid 19 pandemic levels for the first time.

However, The Conference Board’s holiday spending survey forecasts a 2% decline in spending on holiday-related items compared to last year. In addition, a survey by Wedbush Securities found that more than twice as many consumers (47%) plan to spend less this year than those (23%) who plan to spend more.

The recent resumption of student loan repayments could crimp holiday spending more than many expected earlier this year. found that 60% of consumers plan to spend less at Thanksgiving this year, with 63% expecting to decrease spending for the December holidays.

For its part, the National Retail Federation, representing the nation’s largest retailers, sees overall U.S. holiday spending reaching record levels of up to $967 billion with a 3-4% increase from last year. But that still would represent the smallest year-to-year gain since 2019, though in line an average 3.6% increase throughout the 2010s.

Retailers Appear Less Confident

Same-store sales growth at Walmart, the largest U.S. retailer—with 75% more annual sales in 2022 than second-place (AMZN)—has dropped for three straight quarters heading into the holiday season.

Moreover, in the company’s recent quarterly conference call with investors, John David Rainey, chief financial officer, said uneven sales have caused Walmart to think “more cautiously” about consumer spending that it did late this summer.

Meanwhile, Target confirmed it expects a mid-single digit decrease, on a percentage basis, in same-store sales in the fourth quarter. Macy’s (M), which reported a 7% decline in both brick-and-mortar and digital sales in the third quarter, also expects its 2023 sales woes will continue.

And Tuesday, Best Buy scaled back its sales forecast. It now expects a comparable-store sales decline of 6-7.5% for the current fiscal year, compared with previous guidance for a 4.5-6% drop, as its fourth-quarter sales outlook darkens.

Discounts Should Dominate

Retailers and forecasters agree on one key point about holiday sales, though: Inflation-weary shoppers will target bargains and discounts.

“More than 75% of consumers are on the hunt for deals this holiday season, as part of their effort to counteract price increases,” PwC said in its holiday spending preview, noting that consumers are “biding their time while waiting for the best deals.”

TJX Companies (TJX), which operates discount retailers T.J. Maxx, Marshalls and HomeGoods, expects its fourth-quarter comp sales will rise 3-4% from last year. Similarly, Ross Stores (ROST) sees its same-store sales for the 13 weeks ending Jan. 27 increasing 1-2%.

Nonetheless, forecasts for both companies represent a decline from the third quarter, when TJX reported a 6% comp sales gain and Ross said its comp sales rose 5%.

Barbara Rentler, CEO of Ross Stores, said the company’s outlook is affected by “macroeconomic volatility, persistent inflation and, more recently, geopolitical uncertainty.”