Christmas came early for American retailers this year, as evidenced by the strong sales for major retailers like Walmart (WMT), Target (TGT), Macy's (M), and Kohl's (KSS) this week.

On Tuesday, Walmart reported a 9.2% gain in comp sales for the 13 weeks ending Oct. 29, compared to the corresponding 2020 period. In addition, Walmart's U.S. e-commerce sales grew 8% for the quarter and 87% in two years.

On Wednesday, Target reported a 12.7% Q3 comparable sales gain. In addition, similar sales climbed 9.7%, while online sales grew 29%, following a 155% gain last year.

On Thursday, Macy's and Kohl's reported strong sales, too.

Macy's reported a 37.2% gain in comparable sales on an owned basis and a 35.6% gain on an owned-plus-licensed basis from 2020. Kohl's Q3, 2021, net sales rose 15.5% and 14.7% on an annual basis.

"The consistently strong growth we're seeing in our business, quarter after quarter, is a testament to the passion and commitment our team brings to serving our guests, and the trust we've built with them as a result," said Brian Cornell, chairman and chief executive officer of Target Corporation.

Michelle Gass, Kohl's chief executive officer, and Jeff Gennette, chairman and chief executive officer of Macy's, Inc., praised their strategies for delivering solid sales.

"Our strategic efforts to transform Kohl's into the leading destination for the active and casual lifestyle continue to build momentum," said Gass. "We delivered another quarter of record earnings with both sales and margins exceeding expectations. During the quarter, we drove accelerated growth in Active and successfully launched several new brand partnerships, including the initial rollout of 200 Sephora at Kohl's stores, which are off to a great start."

"Consumers continue to spend, and we successfully offered a wide range of expanding merchandise assortment to meet their growing demand," said Gennette. "Looking ahead to the fourth quarter, we remain a special place for holiday shopping, and our robust omnichannel ecosystem is showing resilience in the face of labor and supply chain challenges and enables us to meet customer shopping needs with speed and convenience."

Meanwhile, there's another narrative that could explain the strong performance of major American retailers, robust consumer spending across the economy. Retail sales at the national level rose 1.70% MoM in October, following an 0.8% gain in September, thanks to an improving labor market picture, which has helped Americans find jobs, and therefore, have the money to finance their purchases at the nation's retailers.

According to the U.S. Bureau of Labor Statistics (BLS), the U.S. economy added 531,000 new jobs in October, following 312,000 jobs in September. Meanwhile, the unemployment rate edged lower in October to 4.6%, with the number of long-term unemployed dropping by 357,000 to 2.3 million.

But a couple of more factors had helped consumers open their wallets to the nation's retailers, like the savings accumulated during the pandemic when they were homebound and collected generous government benefits.

According to a report from the Kansas City Fed, savings as a percentage of disposable personal income rose from 7.2% in December 2019 to a record high of 33.7% in April 2020. From March to April of 2020 alone, the savings rate almost quadrupled.

Then there's a $17 billion rise in credit card balances in Q3, according to the New York Federal Reserve, following a similar increase in the second quarter.

American retailers face a severe headwind, too: rising inflation, which is running at an annual rate that is higher than 6%. That's the worst since the 1990s.

According to a University of Michigan report released a couple of weeks ago, consumer sentiment plunged to 66.8 in November from 71.7 in October, thanks to elevated inflation. That was the lowest figure since November 2011.

RELATED STORIES