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It’s time to holiday shop.
Black Friday officially kicks off on Thanksgiving Day, with retailers from J.C. Penney to Best Buy swinging open their doors early to capture deal-seeking consumers. And this year has the setup to be especially merry for many retailers. Unemployment is at 50-year lows, wages are on the rise and major stock market indices are up over 20% on the year.
The only wildcard: how turbulent winter weather in parts of the West Coast and Northeast impact the travel decisions of shoppers.
“I think the consumer is poised to show up [for Black Friday] in a semi big way. I think we are going to see solid sales and will be very happy with the results, but it will be spread out. Not just on Black Friday, but more sales on Cyber Monday and online,” said Invesco chief market strategist Kristina Hooper on Yahoo’s Finance’s The First Trade.
One of the million-dollar questions though is whether a strong start for retailers on Black Friday will power their stocks higher. The likes of Target enters the holiday season with major sales momentum and a stock trading near a 52-week high. So how more upside could there be? Macy’s stock is plumbing fresh 52-week lows after an awful third quarter and outlook. Could Macy’s even be in the discussion as a holiday winner given how bad it has performed this year?
Indeed, it’s a stock picker’s market when it comes to the retail space right now.
“From a stock picking perspective, it’s still a stock picker’s market. It has been for years because of the changes going on in the retail industry. I think those best in breed retail names can continue to outperform. The companies have the formula down and they just have to milk it,” believes Sevens Report Research founder Tom Essaye.
Stay plugged in with my Black Friday live blog as I hit the road to tour stores in New York, talk to shoppers and email with retail executives.
2:00 p.m. J.C. Penney greets shoppers
I have been to each one of J.C. Penney’s early Thanksgiving Day openings — that was a tradition started with former CEO Marvin Ellison (now Lowe’s CEO) back in 2014 via a 5:00 p.m. opening. Every-time the crowds have snaked around the store, and today’s opening was no different.
But in general, I was letdown by the crowd sizes this time compared to a year ago. Another potentially red flag for investors in J.C. Penney is that the company looked more promotional on apparel staples (coats) and housewares. Apparel inventory seemed high likely due to the continued delay in cold weather.
Also worth mentioning is the unproductive floor space at J.C. Penney now that it no longer sells appliances. To be sure, CEO Jill Soltau has her work cut out for her to improve sales per square foot at stores that remain way too big.
See various posts below.
JC Penney stopped selling appliances earlier this year. In its place, they have filled up 25% of the second floor with luggage and 12 bed floor models. Can’t make this up. 😂 #BlackFriday $JCP pic.twitter.com/cR325S9tk5
— Brian Sozzi (@BrianSozzi) November 28, 2019
JC Penney swings open its doors this #BlackFriday and is greeted by shoppers for once $JCP pic.twitter.com/RIxxil5Yv2
— Brian Sozzi (@BrianSozzi) November 28, 2019
Right now, we’re outside #JcPenney in the freezing cold. Once we got our coupons, we got back into the car waiting for the store to open at 2:00PM. #DogThanking #Thanksgiving #ThanksgivingShopping #BlackFriday pic.twitter.com/pI64pw0DDp
— Ms. Pinky Stanseski (@undergradwoman) November 28, 2019
11:00 a.m. ET Dueling online sales data
Investors are usually hit with a ton of third-party sales data on the week of Black Friday to dissect. This one is no different.
New research out of Salesforce shows that digital sales for the Tuesday and Wednesday ahead of Thanksgiving rose 9% to $4.9 billion. Salesforce projects digital sales on Thanksgiving will gain 17% to $4.1 billion.
The numbers here aren’t as robust as those from Adobe Analytics. But they still paint a picture of a U.S. consumer out there spending nicely on deals across electronics, toys, apparel, etc.
10:00 a.m. ET Online sales start hot
The first batch of online sales data for Thanksgiving is in, and it looks pretty appetizing.
Through 10 a.m. ET, online sales have increased 14.5% from the prior year to $470 million according to Adobe Analytics.
Adobe Analytics estimates today’s online sales will grow 14.5% year-over-year to $4.2 billion. The day before Thanksgiving saw online sales surge 22% from last year.
“The strong online sales performance to-date suggests that holiday shopping starts much earlier than ever before. Steep discounts on popular items like computers on the day before Thanksgiving indicate that many of the season’s best deals are already up for grabs. This has led to significant growth in online sales (16.1% YoY increase) so far. What will be important for retailers to track is whether the early discounts will drive continued retail growth overall, or if they have induced consumers to spend their holiday budgets earlier, said Jason Woosley, vice president of commerce product & platform at Adobe.
9:00 a.m. ET Surrounded by retail apocalypse
Four store visits — three Walmarts and one beat-up Kmart — in the books in the Long Island, N.Y. area. The crowds are always non-existent before noon on Thanksgiving Day. Those who are out (besides my crazy self) are shopping for last-minute food for the holiday dinner table. So, no real clues just yet on how the holiday shopping season will begin for retailers in their stores, way too early.
But what has struck me in driving around is another year of retail death. Stores going out of business. Entire shopping centers dark, empty and haunting. To those who say the retail apocalypse is over, I say get a damn clue. With Amazon, Walmart and Target leading the way on same-day delivery for online orders I think investors in mall real estate investment trusts (REITs) and well-known retailers not named Amazon, Walmart and Target will be shocked by the number of store closures over the next few years. As those stores close, retailers essentially cede ground to the strong — in this case Amazon, Walmart and Target — and feel that lost market share in their same-store sales and profit margin metrics.
Then their stock prices.
Here’s a not so fun holiday fun fact. More than 7,000 retail stores have closed so far this year, according to Coresight Research. When all is said and done, Coresight Research estimates 12,000-plus retail stores will be shuttered in 2019.
In 2018, 5,864 retail stores closed.
Happy #BlackFriday from inside the Kmart that is closing in my town after being open for 25 years. $SHLD pic.twitter.com/SSB3eTYhAt
— Brian Sozzi (@BrianSozzi) November 28, 2019
Surrounded by retail death yet again on #BlackFriday as the digital shopping beast continues to steamroll through towns. pic.twitter.com/E6iOMVLpVg
— Brian Sozzi (@BrianSozzi) November 28, 2019
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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