Upbeat holiday shopper traffic on Black Friday may prove short lived
As the holiday season officially kicked off this weekend, shoppers flocked to the malls for a better-than-anticipated turnout on Black Friday. However, analysts remain incredulous as to whether Friday’s surprise will continue to spread holiday cheer for retailers through the season.
“With Thanksgiving weekend sales typically accounting for only 10% of holiday purchases, much business has yet to occur,” said Susquehanna Financial analyst Thomas Filandro. “We remain cautiously optimistic that the season will not be a bust and are forecasting moderate specialty sector sales growth of 2% to 4%.”
Lazard Capital Markets analyst Todd Slater disagrees with the prevailing sentiment, calling Black Friday “blue.”
“Most discount and specialty retail stores we visited were disappointed with traffic and conversion relative to last year,” wrote Slater in a research note today.
ShopperTrak RCT reported an 8.3% increase in Black Friday sales and a 7% increase for the Friday and Saturday, above its 4% to 5% expectation, according to Slater.
“While this sounds strong, we have doubts that sales made plan in most cases,” Slater wrote in a research note. “Our view is that sales largely missed plan, and were skewed to electronics deals (particularly flat-screen TVs and electronic picture frames) and low-margin door-busters (including promotionally-priced cashmere sweaters).”
As the holiday season progresses, given broader macroeconomic pressures are usurping consumers’ purse strings, Filandro says it’s no surprise that the average consumer plans on spending less this holiday selling season.
Susquehanna Financial Group conducted a survey of 2,000 U.S. consumers, focusing on shopping intentions for the 2007 holiday selling season. The group’s survey, which included 1,502 women and 498 men, aged 16 to 50, found that overall spending plans are lackluster, as 36% of respondents said they plan on spending somewhat to significantly less on holiday gifts this year.
Susquehanna found the major reasons for a weak spending outlook were additional expenses (60%), less salary (37%), more debt (36%) and less financial certainty (32%). Only 4% of respondents cited lower home values as a factor in their reduced spending plans, according to the survey.
Among the retailers Filandro maintains a “positive” rating on include, Build-A-Bear Workshop, Inc. (NYSE: BBW), The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE) and Sharper Image Corp. (Nasdaq: SHRP).
“Given the positive move in retail stocks on Friday followed by bullish sentiment from mall developers and sales tracking services over the weekend, we think the trade is to sell the group into possible strength today,” wrote Slater.
