Its Black Friday, when people get to knife each-other over $0.25 off on Milk at Wal-Mart Stores, Inc. (NYSE:WMT)! Here is some of the latest news on retail, for both investors and those ready to take a knife wound for that milk (or Tickle me Elmo, iPhone 5 etc.)
Stifel Nicholas analysts have some 'Black Friday Notes From the Field.'
Both late Thursday night and Friday wthey visited stores to check demand and execution across a wide variety of retailers in three states for Black Friday 2012. Economically, most Americans feel better than last year. Heading into Black Friday, Consumer Sentiment is up about 33%-35% y/y (last year it was running down 10%-11% y/y), home prices are up about 2% y/y (last year down 4%-5% y/y), stock prices are running up about 17% y/y (last year up about 5% y/y), and about 500,000 fewer Americans on continuing unemployment.
However unlike some, they believe today is not the day to make a call on the economy, but to make a call on store execution and merchandise. So what is black Friday without the knifing for cheap products? Stifel believes that Black Friday is about the press coverage as much as the shopping. A gift purchased on Black Friday is, by its essence, pulled-forward demand. So, all this talk is about the talk. The following are their thoughts on the past 12 hours.
Wal-Mart Stores, Inc. (NYSE:WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) opened doors between 5:00PM and 6:00PM (vs. 8:00PM last year) with the first doorbusters event at 8:00PM (vs. 10:00PM last year). They note a large numbers of employees they spoke with arrived around 5:00PM, with some employees arriving much earlier to prepare. Organization was more effective than last year with improved fencing for customer queue lines and strong store map/advertisement execution.
They note strong signage for doorbuster deals and key items well placed in action alley. They further note large supplies of the Xbox 360 Bundle, but there was a sell-out of the PS3 bundle by 9:00PM. Video game deals were popular. Long lines for doorbusters included the 32” Emerson TV for $148.
However, by the 5:00AM promotions, traffic levels were down significantly y/y. Many cash registers were open with no lines whatsoever, and the store felt less busy than an average mid-week afternoon. One cashier noted she had not done a single transaction in the prior half hour.
Best Buy Co., Inc. (NYSE:BBY) opened at midnight on Black Friday (see figure 7). Employees believe line length was larger y/y. They believe the featured Toshiba 40” TV for $179 was one of the more successful doorbusters, and note strong signage in the front of the store for mobile.
Consistent with Wal-Mart Stores, Inc. (NYSE:WMT), they saw significantly less traffic y/y by 5:00AM. Some doorbuster deals did remain in stores at that time – including three types of 32” TV and a BlueRay player. Temporary registers set up on folding tables (and still staffed at 5:30AM) seemed excessive, given general lack of traffic at that time.
Dicks Sporting Goods Inc (NYSE:DKS)
Stfiel analysts saw short lines at Dicks Sporting Goods Inc (NYSE:DKS) (as they expected – sporting goods not a Black Friday focus), but saw strong traffic in apparel and guns & ammo.
Credit Suisse analysts did not specify Dicks Sporting, but note that in the stores they visited, they noticed a solid initial start to Black Friday. Big sellers were apparel, ping pong tables, guns/ammunition and footwear, departments that had promotional tie-ins.
Abercrombie & Fitch Co. (NYSE:ANF)
Piper Jaffray analysts visited Abercrombie & Fitch Co. (NYSE:ANF) and noted strong traffic, a summary below:
The company's consistent promotional cadence to the prior year (50% off entire store) was well received as evidenced by lines at store entrances and cash wraps. Importantly, the company ran its doorbuster promotion for the first 6 hours versus the first 9 hours last year - which could be a modest net benefit to the day's selling margin.
Post 6:00AM local time, stores retreated to 40% off entire purchase, also consistent Y/Y. While discounts appear aggressive, they think the company fully executed to its plan and achieved exactly what it needed to do: drive traffic to reinvigorate consumer interest in the brands and introduce teens to a fresh, new, fashion-infused assortment atop the foundation of heritage merchandise in knits, denim, and wovens.
BMO focuses on the broad picture and comes to a similar conclusion as Pipper Jaffray. They think that black Friday sales data will come streaming in through the weekend, but economics should not expect reliable guidance on consumer spending trends, as changing store hours, new products and varying promotions can distort the year-to-year changes in early holiday spending. U.S. real consumer spending rose 2.0% annualized in 2011Q4 and likely held to this modest pace in the current quarter, as improved household finances and confidence is tempered by still-modest job growth and potential looming tax increases in the new year. In Canada, less borrowing in the face of elevated debts will dampen the holiday spirit. They note that retail sales rose just 1.8% y/y in September, and half of the increase was due to new auto-mobiles…which aren’t exactly the cheapest thing to give.
Oppenheimer agreed and notes that Abercrombie & Fitch Co. (NYSE:ANF) was the clear teen winner in traffic and conversion and the only one that had no promotions until today, when it switched to 50% off storewide.
Oppenheimer states that among the disappoints are, Ann Inc (NYSE:ANN) which was the outlier in that stores didn't open at midnight, while New York & Company, Inc. (NYSE:NWY) had outsized positive results. While early to make the ultimate call on the success of holiday, they are confident in its strong start.
Fiscal Cliff and Black Friday
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) thinks that 'this time is different.' Because of the upcoming Fiscal cliff, their analysts believe that Black Friday will have strong implications for consumer spending and sentiment.
Black Friday actually began on Thursday for many US consumers who cut short their Thanksgiving dinners to be amongst the first through the doors of retailers that opened earlier than usual this year. Although for those who wish to let the fingers do the walking and shop from the comfort of your homes Cyber Monday also presents an attractive alternative. They note that economics/investors etc should watch out for commentary from retailers and industry groups next week for this weekend’s sales performance which should shed some light on consumer sentiment amid the ongoing ‘fiscal cliff’ uncertainty.
Dick's, Nordstrom, Dillard's, The Walking Company, Journeys and UGG