Simon Property Group CEO David Simon predicted a “major comeback” for suburban retail coming out of the pandemic on his company’s fourth-quarter conference call earlier this month.
“With all of the urbanization that was predicted two or three years ago, the question was, ‘Why are the suburbs going to exist if everybody is going to live in an urban environment?’,” said Mr. Simon. “I’m telling you, the suburbs are going to be hot. And our quality real estate is going to be where the action is.”
Numerous articles have detailed how urbanites are abandoning congested cities for the suburbs in part to ride out the pandemic. Longer term, suburban living is expected to be driven by the shift toward remote working. Remote working appears to have also accelerated the trend toward living in second-tier cities that provide a lower cost of living and similar cultural and social draws of bigger cities. Temporarily, local businesses have been the beneficiaries of money diverted from traveling and other entertainment.
Mr. Simon appears to be expecting more of a bump for his suburban luxury malls rather than a surge amid many forecasts calling for continuing challenges for malls. He was encouraged by improved traffic in Texas and Florida properties as COVID restrictions have eased.
Discussion Questions: Will the shift toward remote working, the reduced appeal of urban living or some other factor enhance the suburban retail opportunity, including malls? Do you expect retailing in the suburbs to receive a minimal or major boost coming out of the pandemic?
Comments from the RetailWire BrainTrust:
Last year retail sales growth in the suburbs was stronger than growth in urban areas. Two main factors contributed to the differential: people migrating out of cities and people commuting less so spending more closer to home. Will these trends persist into 2021? Most likely, although the gap will close once the pandemic is over. However, I am skeptical that this will save all suburban malls. Stronger properties may benefit, but weaker ones will continue to decline. Even with sales growth, there is still too much bad space in many suburban locations and, over time, that needs to be redeveloped or transformed into other uses.
Neil Saunders, Managing Director, GlobalData
Certainly, the shift towards remote working has had, and will continue to have, an impact on urban vs suburban living. Urban cities are taking the brunt of this hit while suburban areas are reaping the benefits, including retail stores. If behaviors formed during the pandemic stick around after the pandemic, then the suburban landscape could be changed post-pandemic–from a geography and real estate perspective. However, once the pandemic is over and urban-turned-suburban dwellers start to realize cost saving benefits, I’d venture that travel and tourism will benefit faster than the local malls.
Rachelle King, Retail Industry Strategist and Thought Leader
I don’t agree at all. The death of the mall has more to do with well documented struggles of the traditional anchors and changing shopping patterns. Centers that have entertainment options as part of their value proposition and are destinations are doing fine for the moment. As for the traditional “come and park a mile away and walk through shops and a food court and maybe see a movie” malls — that’s a stale model that will not survive.
Gary Sankary, Retail Industry Strategy, Esri
I wouldn’t expect David Simon to portray a negative forecast when his company’s future is tied to his messaging. 2020 is a non-year. It’s such an exception to the prior and future reality that it needs to be assigned an asterisk and removed from analysis. Cities and suburbs will adjust a little based on the pandemic’s influence, but there is not/will not be more than a minor consumer distribution change and retail stores and especially malls will continue to deal with the pre-pandemic shift to digital that was in play.
Ken Lonyai, Consultant, Strategist, Tech Innovator, UX Evangelist
Headlines of the Week
Amazon has bought Selz, a company that makes tools to help businesses launch their own online stores. Amazon quietly acquired the e-commerce platform on Jan. 15, but it didn’t publicize the acquisition. Selz announced the deal in a company blog post. “We have signed an agreement to be acquired by Amazon and are looking forward to working with them as we continue to build easy-to-use tools for entrepreneurs,” Martin Rushe, CEO and founder of Selz, said in the blog post. In recent months, Amazon CEO Jeff Bezos has zeroed in on Shopify, an e-commerce enabler that has seen its business skyrocket during the pandemic, as a competitor as consumers have turned to online retailers for both essential and non-essential goods during the pandemic. Amazon previously operated a service similar to Shopify, called Amazon Webstore, that allowed small businesses to run online stores built on Amazon’s technology. However, the company shut down Amazon Webstore in 2015.
Fabric and craft retail chain JOANN plans to go public, the company announced in an S-1 filing with the Securities and Exchange Commission. JOANN has grown during the pandemic amid a surge in arts and crafts among stay-at-home orders and social distancing trends. The chain added approximately 4,000 jobs during this time, according to the prospectus, and continues to expand its digital offerings and omnichannel platform. The DIY trend grew in popularity as masks became a central part of people’s everyday wardrobes and consumers around the country began making and donating masks. JOANN sold mask-making supplies and also led several mask donation campaigns, including a “Masks for Schools” program and a “Make to Give” DIY campaign. JOANN records over 69 million “addressable” customers, eight million of which were added since Feb. 1, 2020. The chain also experienced 38 percent growth in total comparable sales since May of 2020.
Apparel & Footwear
Nearly a year after a proposed spin off of Victoria’s Secret from parent company L Brands was called off, the lingerie brand has been trying to quietly course correct some previous missteps. In 2019, Victoria’s Secret recorded revenue of $6.81 billion, a 7% decline over the previous year, and same-store sales this year have been declining by mid-single or double-digits each quarter, largely due to the coronavirus. Retail analysts say that Victoria’s Secret’s recent moves have been less focused on trying to re-establish itself as the most-talked about brand in lingerie, and rather getting back to the fundamentals of retail. For example, the brand has been cutting back on promotions, and also doing more limited-edition collections in order to reduce the inventory on hand. It’s also slowly getting back into new categories, most recently announcing this week that it will start reselling swim wear in select stores after previously exiting the category in 2016. All of these moves are aimed at reestablishing Victoria’s Secret as a consistently profitable business.
In the latest addition to the brand’s C-suite, Banana Republic on Monday named Ana Andjelic as the company’s new chief brand officer, according to a post on LinkedIn. Andjelic has 15 years of experience leading luxury lifestyle brands, according to an emailed statement from a company spokesperson. “She will lead the creative and marketing teams in bringing the brand’s compelling vision to life while keeping the customer at the center of everything we do,” the spokesperson stated.
Apex Global Brands Inc. has entered into a merger agreement with Galaxy Universal LLC, which is expected to occur in the second quarter of 2021. The company said, under the terms of the agreement, Galaxy Universal will acquire all of the outstanding shares of Apex for 2 dollars per share in cash. “After conducting an extensive analysis of our strategic alternatives with our financial advisor, the board of directors concluded that our sale to Galaxy Universal is the best path to deliver equity to our shareholders,” said Henry Stupp, Chief Executive Officer of Apex Global Brands in a statement. The company added that its officers, directors and certain stockholders collectively holding approximately 30 percent of the outstanding shares of Apex have entered into voting agreements committing them to, among other things, vote in favour of adopting the merger agreement.
One day after their first SPAC cut a deal to buy Owlet Baby Care at a $1.1B valuation, a group that includes Pimco, fashion designer Tommy Hilfiger and veteran consumer-brand executives is launching a second special purpose acquisition company. The team aims to raise as much as $230M for Sandbridge X2 Corp. (SBII) — a follow-up to Sandbridge Acquisition Corp., their first SPAC, according to an S-1 filed Wednesday with the U.S. Securities and Exchange Commission. The new SPAC will have the same management as Sandbridge Acquisition Corp. does, led by CEO and Chairman Ken Suslow. Plans call for the new SPAC to sell 23M investing units at $10 apiece, while also offering underwriters the option to buy as many as 3M additional units to cover any overallotments.
H&M has issued a $604 million bond offering that has attracted $4.6 billion in orders. These are sustainability-linked bonds (SLBs), which require H&M to use more recycled materials and reduce greenhouse gas emissions—and pay more interest if those goals aren’t met. When a bond is issued, investors loan a company money for a specific period of time while receiving interest payments. In this case, demand from investors was so high that H&M was able to cut the interest rate in half. The SLB market is small, but becoming increasingly popular among companies and investors looking to meet environmental goals. And H&M isn’t the first retailer to get involved. Last year, Chanel issued its first SLB offering at a ~$699 million price tag.
Athletic & Sporting Goods
Adidas has concluded its strategic assessment for Reebok with an announced plan to unload the smaller brand. In a press release, the company offered few details about a possible sale or spin off but said it has now “decided to begin a formal process aimed at divesting Reebok.” Explaining the decision, Adidas CEO Kasper Rorsted said in a statement that “we have come to the conclusion that Reebok and adidas will be able to significantly better realize their growth potential independently of each other.”
Tech wellness brand Therabody has raised equity from more than 100 famous names across sport, business, culture, and entertainment. The group of investors includes Premier League footballers and rugby players alongside US sports personalities, including nine current and former professional quarterbacks. The list also includes a number of celebrities across music and entertainment, many of whom say they already incorporate Therabody’s recovery devices into their training, recovery, and overall wellness routines. The latest round of investment includes contributions from the likes of US personalities Jay-Z, James Harden’s 13 Endeavors, and Kevin Durant and Rich Kleiman’s Thirty Five Ventures. Global investors include Premier League trio Trent Alexander-Arnold, Kevin De Bruyne, and Marcus Rashford, as well as England rugby star Maro Itoje.
GSM Outdoors, a multi-brand manufacturer and technology innovator of shooting and hunting products, has acquired TruGlo, a highly recognized name in the outdoor industry for more than 25 years. The company launched in 1993 when Paul LoRocco invented the first multi-color fiber optic archery pin sight, but the quick acquisition was a natural fit for firearms. It wasn’t long before the company harnessed the approach in a line of gun sights. Assembled in the U.S.A., TruGlo also manufacturers the only patented, fully encapsulated tritium sight on the firearm market. Glowing bright both day and night, TFX sights have a compact snag-free design, longer sight radius, and durable construction.
Cosmetics & Pharmacy
Amid the pandemic, CVS Health’s fourth-quarter and full year results brought increased revenue. The Woonsocket, R.I.-based company saw fourth-quarter revenues of $69.5 billion and $1.30 in earnings per share. The full-year revenue increased to $268.7 billion, which represents year-over-year growth of 4.6%. Net income decreased 44.1% for the quarter. The company attributed the decrease primarily to lower operating income and a loss on early extinguishment of debt of $674 million in the quarter, which was partially offset by lower income tax expense primarily driven by the decrease in pre-tax income.
Net income increased 8.5% for the year compared to the prior year which the company said was primarily due to the higher operating income and lower interest expense primarily due to lower average debt in 2020. This was partially offset by an increase in the loss on early extinguishment of debt to $1.4 billion in 2020, compared to $79 million in 2019 and higher income tax expense primarily driven by the increase in pre-tax income.
Beiersdorf AG, maker of Nivea, Eucerin and La Prairie products, reported full-year 2020 sales declined 8.2 percent, due to the coronavirus pandemic’s lockdowns and travel restrictions, but the company expects a sales recovery in 2021. “There is still some uncertainty this year. However, I am confident that we will see clear improvements by the end of the year as vaccinations gather pace in many countries,” said Stefan De Loecker, chief executive officer of Beiersdorf, in a press release published on Tuesday evening. The company reported sales of 7.03 billion euros in the 12 months ended Dec. 31, 2020, down 5.7 percent on an organic basis. Still, Hamburg, Germany-based Beiersdorf said it gained market share in all of its core brands, skin care segments and regions in 2020.
Discounters & Department Stores
In the U.S., an increasing number of retailers have decided to leave the traditional mall. Now one mall owner, Unibail-Rodamco-Westfield, is leaving the U.S. Three years ago, the Paris-based conglomerate took over several U.S. malls when it acquired some operations of Australia-based Westfield. The company, which now runs 28 properties here, last week announced it “will implement a [program] to significantly reduce its financial exposure to US assets in 2021/2022.” URW last year already sold its interest in three U.S. malls, (Meriden, Siesta Key and Sunrise); now executives say they will focus on operating in Europe.
As the pandemic moved holiday shopping online, Walmart’s U.S. comp sales growth beat expectations at 8.6%, and e-commerce sales grew 69% year over year in the fourth quarter. Comps at Sam’s Club also grew 10.8%. Walmart’s revenue rose 7.3% year over year to $152.1 billion from $141.7 billion, according to a Thursday press release. For the fiscal year, the retailer’s revenue rose 6.7% to $559.2 billion, with U.S. comps up 8.6%, e-commerce up 79% and Sam’s Club comps up 11.8%.
Target on Tuesday announced the promotion of Cara Sylvester to the role of executive vice president, and chief marketing and digital officer. Sylvester most recently held the role of senior vice president of home, according to a press release. She joined the company in 2007 and has served in several leadership positions across strategy and merchandising at Target. Her predecessor, Rick Gomez, is now Target’s executive vice president, and chief food and beverage officer, per the release. The company also named Christina Hennington as executive vice president and chief growth officer, a new role for the company, and Katie Boylan as executive vice president and chief communications officer. All leadership changes are effective immediately.
Walmart announced Thursday it will give 425,000 employees a raise, a move that will increase its average pay to above $15 an hour. The discounter is the country’s largest private employer with a U.S. workforce of 1.5 million people. Its minimum starting wage will remain $11 an hour. Starting March 13, the company said it will pay store workers who stock shelves or support its e-commerce business $13 to $19 an hour, depending on their role and store location. In an interview with CNBC’s Courtney Reagan on “Squawk Alley,” Walmart CEO Doug McMillon said the company supports increasing the federal minimum wage, which is $7.25 per hour. He does not back a plan, advocated by President Joe Biden, to raise it to $15 minimum wage, however.
Emerging Consumer Companies
Super73, the Irvine, California based e-bike company popular among YouTubers and film celebrities, raised $20 million from Volition Capital. The funds will be used to help the direct-to-consumer company grow its 75-person staff, improve its customer service operation, and expand its product lineup. With their long banana seats, parallelogram-shaped frames, upright handlebars, fat tires, and oversized headlights, Super73 helped popularize a style of e-bike that was influenced by the mini-bikes or mopeds of the 1960s, ‘70s, and ‘80s. The company’s relaxed, SoCal vibe has helped it earn a following from a growing cadre of A-list celebrities, musicians, and influencers.
Titan, the New York based company building an investment management platform for millennials, raised a $12.5 million Series A round. The round was led by General Catalyst, with participation from Sound Ventures (actor Ashton Kutcher and Guy Oseary’s VC firm), Scribble VC, BoxGroup, Y Combinator, South Park Commons, Instagram founder Mike Krieger, Lee Fixel and others. Titan is hoping to build on the momentum it saw in 2020, during which it grew revenue, customers and assets under management by 600% with effectively no marketing budget, according to co-founder Joe Percoco. The New York-based company says it’s approaching $500 million in assets under management and was cash flow positive last year.
Bev, the Los Angeles based canned wine company founded in 2017, raised $14 million and entered into a distribution deal with E. & J. Gallo to expand into some of the nation’s biggest retailers. Gallo is the largest family-owner winery in the United States, and will help increase the Bev presence in Target, Albertsons, BevMo, Safeway, and Total Wine, along with HEB and Kroger, the nation’s largest grocery chain.
Grocery & Restaurants
One Rock Capital Partners in partnership with Metropoulos & Co. has entered into an agreement to acquire Nestle Waters North America for approximately $4.3 billion. Brands included in the sale are Poland Spring, Deer Park, Ozarka, Ice Mountain, Zephyrhills, Arrowhead, Pure Life and Splash. The brands combined had sales of approximately $3.7 billion in 2019, according to Nestle. The deal is expected to be completed in the spring and C. Dean Metropoulos will become the company’s chairman and interim chief executive officer. Last year Nestle announced it would conduct a strategic review of parts of the North American waters division and sharpen the focus of its global water portfolio. The company will retain ownership of the Perrier, S. Pellegrino and Acqua Panna water brands.
Danone has entered into an agreement to acquire Earth Island, Los Angeles, the maker of plant-based products sold under the Follow Your Heart brand. Terms of the acquisition were not disclosed. Product applications sold by Earth Island include Veganaise and other dips and spreads, dairy-free cheese, dairy-free yogurt, salad dressing, plant-based eggs and a pancake and waffle batter. “Our mission has always been to produce the best plant-based food products and to make them available to as many people as possible,” said Bob Goldberg, co-founder and chief executive officer of Earth Island. “We’re very pleased to be joining the Danone family of plant-based companies in a collective effort to bring positive change in the world through the creation of sustainably and responsibly-made foods.” The acquisition will help Danone achieve its goal of reaching $5 billion in plant-based product sales by 2025, according to the company.
Home & Road
Dorel Inds. and an affiliate of funds managed by Cerberus Capital Management L.P. have agreed to terminate a purchase agreement that would have taken the company private. As a result, the board of directors for the publicly traded company has cancelled a special meeting of shareholders that was scheduled for Feb.16. The announcement marks the end to plans announced Nov. 12 for the Cerberus affiliate to acquire for C$14.5 per share all of Dorel’s issued and outstanding Class A Multiple Voting Shares and Class B. Subordinate Voting shares. The proposed purchase price was increased to C$16.00 per share on Jan. 31. The termination of the deal is in response to exchanges and discussions between Dorel and many of its shareholders. It also takes into account a review of proxy votes submitted before a Friday, Feb. 12, deadline.
U.S. mattress imports continued the downward trajectory in December dropping 63%, or about 511,000 units, the second consecutive monthly decline, according to an industry report. Last month, the first month following antidumping duties that went into effect in November, mattress imports dropped 46%. Raymond James, citing U.S. International Trade Commission data, said mattress imports declined year-over-year in all seven countries targeted under antidumping duties. Vietnam, the largest source of imported mattresses in 2020, saw a 226,000-unit decline in the month compared with December 2019. In addition to Vietnam, the other six countries cited in the latest trade case filed include Cambodia, Indonesia, Malaysia, Serbia, Thailand and Turkey.
With delivered sales impacted by pandemic-related supply chain restraints, La-Z-Boy saw its fiscal 2021 third-quarter revenue dip 1.2% to $470.2 million. The three months ended Jan. 23 were being compared with a record third quarter in La-Z-Boy’s 2020 fiscal year, and written same-store sales were up 6.3% with the company reporting strong acceleration in January. Third-quarter income of $29.2 million was off 15.3% compared with the same period last year. Stripping out Canadian stores that were closed at various points during the quarter due to COVID-19 restrictions, written same-store sales increased 8.2% for La-Z-Boy’s retail network. Strong momentum in January brought fiscal 2021 year-to-date written same-store sales for the network to 18% vs. the prior-year period.
Sleep retailer Sleep Number Corp. reported fourth quarter net sales of $567.9 million, a 29% increase compared with the same quarter last year. For the quarter ended Jan. 2, the company had an increase in online and phone sales of 19%, which represented 14.5% of net sales. Net income for the quarter was $61.4 million, a 155% increase from $24.1 million in the year-ago period. Operating income for the quarter increased 126% to $75 million. Earnings per diluted share increased to $2.19. In the full year, the company posted net sales of $1.86 billion, a 9% increase over net sales of $1.7 billion for last year. Net income for the full year was $139.2 million, climbing 7% from $81.8 million for fiscal year 2019.
Jewelry & Luxury
Burberry has just repaid a 300 million pounds loan from the Bank of England’s Covid Corporate Financing Facility (CCFF). The luxury brand was able to do that thanks to the strong online business and peaking demand amongst wealthy Chinese consumers. The luxury fashion brand is also set to repay the 7 million pounds injection it received in business rates relief, a spokesman confirmed earlier this week. Burberry said online sales in China grew by a ‘triple digit’ percentage in the third quarter, covering the 13 weeks to Boxing Day, part of a 50 percent global rise. But shop sales fell by 9 percent, points out the ‘Financial Times’.
Hodinkee, the online watch publication, has purchased pre-owned watch e-tailer Crown & Caliber. Financial details were not disclosed. Since its founding in 2008, Hodinkee, which started as a watch blog, has branched out into selling insurance, limited-edition timepieces, and now secondhand timepieces. “We’re rolling out a small pre-owned selection on our site, and will grow it exponentially over time,” said founder and executive chairman Benjamin Clymer in a post. “And soon, you will be able to use your Crown & Caliber trade-in credit to make purchases in the Hodinkee shop.”
On Feb. 1, U.S. Customs and Border Protection (CBP) officers in Louisville, Ky., intercepted two packages that contained more than 200 pieces of counterfeit Cartier jewelry, the agency said. The shipper “used a common technique” in hopes of evading detection by customs officers, sending the items in multiple packages with the expectation that at least some of the merchandise would make it through, the CBP said. The shipments contained a total of 246 items: 177 bracelets, 57 rings, and 12 necklaces, all of which bore a doctored version of Cartier’s protected trademark. If those items had been real, the pieces’ overall total retail value would have been $5.2 million.
Private equity firm Antares Advisory last year launched a fund aimed at supporting Italian luxury fashion and lifestyle companies and is now leveraging the experience of Isabelle Harvie-Watt, who has an extensive 20-year background in working for luxury fashion brands ranging from Giorgio Armani and Versace to Tod’s Group. The fund, as reported, is looking to support midsized luxury fashion and lifestyle brands dented by financial problems and nonperforming loans, classified as UTP, or Unlikely to Pay.
Office & Leisure
Bookstore sales rallied slightly in December from deep monthly slumps for most of 2020, but were still down 15.2% in the last month of the year compared to December 2019. For all of 2020, bookstore sales fell 28.3% from 2019, according to preliminary estimates from the U.S. Census Bureau. December bookstore sales were $879 million, down from $1.04 billion in December 2019. The 15.2% December drop was the smallest decline since February, when sales slipped 0.7% before the global pandemic struck. For the entire retail segment, sales for the year were up 0.6%, with December sales ahead 4.2%. The Census Bureau typically makes later adjustments to its preliminary estimates, but those changes will not dramatically alter the final sales numbers. Bookstore sales are from stores at which books constitute at least 50% of revenue.
Cricut, which makes electronic machines for crafting, filed on Tuesday with the SEC to raise up to $100 million in an initial public offering. Cricut’s versatile connected machines, design apps, and accessories and materials allow its community of 3.7 million users to make personalized crafts. Along with its machines, the company also provides two subscription offerings, Cricut Access and Cricut Access Premium. As of September 30, 2020, the company had nearly 1.2 million Paid Subscribers, and its total community of users grew 66% year-over-year. The South Jordan, UT-based company was founded in 1969 and booked $762 million in sales for the 12 months ended September 30, 2020. It plans to list on the Nasdaq under the symbol CRCT.
The fastest-growing retail cannabis business in the United States saw its revenue rise 140% in 2020, fueled by a same-store sales increase of 63%. One year ago, it had just 25 stores. Its national footprint is now 46 stores following this week’s closing of an acquisition of a four-store chain in Colorado and Oklahoma. And while dispensary chains like Harvest Health and Green Thumb fight over old bank locations for their 2,000-sq.-ft. sizes and safes (it’s a cash business), this retailer takes credit cards and looks for spaces in the 20,000-sq.-ft.-to-30,000-sq.-ft. range. “We are the Home Depot of the cannabis business,” said Michael Salaman, the president of GrowGeneration, a chain of specialty hydroponic and garden centers in 11 states that sells grow lights, organic fertilizer, greenhouses, trimming machines, and more to the growing legions of cannabis cultivators in the U.S. What GrowGeneration stores do not sell, though, is cannabis–and that makes expanding their presence easier for them.
Technology & Internet
Canadian e-commerce firm Shopify Inc. says it will take advantage of “unprecedented opportunities” in 2021 to speed up innovation and expand into new markets, but warned that its growth rate will slow. Revenue will grow “rapidly” this year but not as quickly as in 2020, when it increased 86% to $2.93 billion, the company said Wednesday. It didn’t give specific guidance on earnings for the current year. The arrival of vaccines could see some consumer spending rotate back to bricks-and-mortar retailers, Ottawa-based Shopify said. Revenue in the fourth quarter was $978 million, soaring past analysts’ forecasts for $910 million, propelled by a boom in online shopping during the global pandemic. The company said it plans to reinvest gross profits “back into our business as aggressively as we can.” Gross merchandise value — the broadest measure of product sales flowing through Shopify’s platform — was $41.1 billion in the fourth quarter, up 99% from the same quarter a year earlier, helped by soaring demand for online shopping during the global pandemic. Full-year GMV was $119.6 billion.
Consumers in Asia are the world’s most avid online shoppers. But big U.S. ecommerce players, including Amazon.com Inc., are encountering headwinds as they seek to enter these booming markets from powerful domestic rivals and protectionist government policies. Asian consumers in 2020 purchased a hefty $2.525 trillion worth of goods on retail websites and multi-merchant marketplaces, an increase of 19.2% from $2.118 trillion in 2019, according to Digital Commerce 360 estimates. While Asia accounted for 59.1% of global online retail sales in 2020, that was down from 61.3% a year earlier, Digital Commerce 360 says. That’s a result of China and several other major Asian nations containing the COVID-19 pandemic more quickly than did many Western nations, where physical stores remained closed or operated with reduced capacity for much of the year.
Finance & Economy
Total household debt has jumped 1.4% to $14.56 trillion during the fourth quarter of 2020, in large part due to the steep uptick in mortgage loans as Americans participated in the booming housing market. Mortgage originations, including refinances, reached a record high of $1.2 trillion for the fourth quarter as Americans took advantage of low mortgage rates and stimulus. Meanwhile, credit card debt also increased in the fourth quarter by $12 billion to $820 billion, though it is still $108 billion lower than it had been at the end of 2019. This marks the largest yearly decline since 1999, consistent with continued weakness in consumer spending as well as paydowns by card holders.
Consumers flocked to spend their stimulus checks in January, sending retail sales for the month up 5.3% in a blockbuster start to 2021, according to a government report. Economists surveyed by Dow Jones were expecting a rise of just 1.2%. Excluding autos, sales rose 5.9%, also far ahead of the 1% estimate in a display of unexpected strength from the consumer. A month after Congress approved a $900 billion additional stimulus package on top of the $2.2 trillion approved earlier in 2020 to counteract the Covid-19 impact, shoppers were armed with $600 checks they used to buy a variety of goods. The jump in consumer spending came at a time when expectations for growth in the early part of 2021 were muted as the economy continued to shake off the pandemic-induced slowdown. Spending gains were broad-based, with every major category showing increases.