Wall Street Lunch: Retail Sales Stall In December As Middle And Lower-Income Consumers Hit Pause

Wall Street Breakfast5.74M FollowersSubscribe5ShareSaveComment(1)SummaryRetail sales were flat in December, missing expectations and highlighting cautious middle- and lower-income consumer spending.Department stores like Macy’s (M), Kohl’s (KSS), and Dillard’s (DDS) saw year-over-year declines, while nonstore retailers’ growth slowed.Coca-Cola (KO) missed Q4 revenue expectations and guided for full-year organic sales growth below consensus.Paramount Skydance (PSKY) sweetened its Warner Bros. Discovery (WBD) bid with a ticking fee and coverage of key termination and refinancing costs. Daniel Grizelj/DigitalVision via Getty Images Listen below or on the go on Apple Podcasts and Spotify Retail sales stall as high-income spends, but mid and lower struggle. (0:15) Datadog rallies on upbeat guidance. (1:27) Paramount Skydance sweetens Warner Bros Discovery bid with ticking fee. (1:56) This is an abridged transcript of the podcast: Our top story so far, retail sales were flat in December, missing expectations for a 0.4% increase and slowing from 0.6% growth in November. Sales were up 2.4% from a year ago. Core retail sales, excluding motor vehicles and parts, were also flat, versus forecasts for a 0.4% gain. Heather Long, chief economist at Navy Federal Credit Union, said: “This is a K-shaped economy, with strong spending from the top and much more cautious spending from middle- and lower-income consumers.” She added the holiday season was “solid, but not spectacular,” with shoppers hunting for bargains — and buying earlier to grab discounts. “Overall, the consumer is still spending,” Long said, “but this is the Costco economy for the middle class.” Among weak categories: furniture and home furnishings, down 5.6% from a year ago. Department stores were down 0.3% year over year — not great news for Macy’s (M), Kohl’s (KSS) and Dillard’s (DDS). And nonstore retailers rose just 0.1% month over month, though they were still up 5.3% year over year — a slower pace for the category that includes Amazon (AMZN), Etsy (ETSY), Wayfair (W) and eBay (EBAY). Among active stocks, Coca-Cola (KO) is lower after missing Q4 revenue expectations. The company sees full-year organic sales growth of about 4% to 5%, below the 5% consensus, with EPS growth of 7% to 8%. DataDog (DDOG) is rallying after beating Q4 expectations and issuing bullish Q1 guidance. The cloud security and monitoring platform sees first-quarter 2026 revenue of about $956M, above the $934M consensus. And Spotify (SPOT) is also higher after guiding above expectations for subscriber metrics in the current quarter. For Q1, total MAUs are seen rising about 9M to 759M, above the 752.45M consensus. In other news of note, Paramount Skydance (PSKY) sweetened its takeover bid for Warner Bros. Discovery (WBD) by adding what’s known as a “ticking fee” — paying WBD shareholders $0.25 per share for every quarter the deal isn’t finalized after the end of this year. That works out to roughly $650M per quarter, aimed at easing concerns about regulatory delays. Paramount also said it would cover Warner’s $2.8B termination fee to Netflix if Warner walks away from its current deal — and, if needed, backstop a debt refinancing and cover another $1.5B in related fees. Warner said it will review the amended offer and later issue a board recommendation. And in the Wall Street Research Corner, Goldman Sachs’ Panic Index is back near lofty historical levels.

Analyst Gail Hafif said the latest reading is 9.22, based on a mix of one-month S&P implied volatility, VIX volatility, put-call skew, and the slope of the volatility term structure. Hafif said those metrics suggest investors “are not far from max fear.”This article was written byWall Street Breakfast5.74M FollowersSubscribeWall Street Breakfast, Seeking Alpha's flagship daily business newsletter, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices) and is published before 7:30 AM ET every market day.

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