November 25, 2022
Today is the Super Bowl of shopping, Black Friday, which retail shareholders hope will turn around a year of pain for the sector that has been battered by inflation and worries of a recession.
Black Friday is the beginning of the most important shopping period of the year, a time when individual investors hope beaten-down consumer stocks will see a turnaround.
Recent data has shown signs that inflation may be slowing and stronger-than-expected retail spending might keep the economy out of a deep recession. Investors poured a net $1.05 billion into consumer discretionary stocks in the past week, the sixth-largest weekly inflows since 2008, data from Bank of America Global Research showed.
Consumer discretionary stocks, a group whose members run the gamut from Amazon (Tii:AMZN) and automaker Tesla (Tii:TSLA) to retailer Target (Tii:TGT), have been hammered by surging prices, with the S&P 500’s consumer discretionary sector falling nearly 33% for the year to date compared with a nearly 17% fall for the broader index, according to a story by Reuters. Black Friday is traditionally one of the year’s biggest shopping days and may give investors greater insight into the extent that consumers are opening their wallets.
The day is a barometer for the retail sector. Depending on the strength of sales on Black Friday, investor confidence in retailers can rise or fall.
Holiday spending is expected to be healthy even with still-high inflation, as the National Retail Federation recently forecast that holiday retail sales during November and December will grow between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion. Last year’s holiday sales grew 13.5% over 2020 and totaled $889.3 billion, shattering previous records. Holiday retail sales have averaged an increase of 4.9% over the past 10 years, with pandemic spending in recent years accounting for considerable gains. In the last 20 years, holiday spending has doubled, according to statistics from the National Retail Federation.
From a retail shareholder standpoint, stocks in the consumer discretionary sector are some of the most popular. Stocks in the sector include furniture, appliances, housewares, consumer electronics, apparel and luxury goods, department stores, hotels, resorts and restaurants.
It also includes cruise companies like Carnival (Tii:CCL), Norwegian Cruise Line (Tii:NCLH) and Royal Caribbean International (Tii:RCL), all of whom offer shareholder perks on the TiiCKER platform. Retailers like Aterian (Tii:ATER) with its hOmeLabs and Vremi brands, Whirlpool (Tii:WHR) and its brands like KitchenAid, Maytag and Amana and Wolverine Worldwide (Tii:WWW) with its Bates, Chaco, Hush Puppies, Keds, Merrell, Saucony, Sperry and Stride Rite brands also offer shareholder rewards on TiiCKER to retail investors who register a free TiiCKER account and connect a brokerage with enough shares.
Consumer discretionary stock prices tend to rise and fall with the overall economy. That means they tend to be cyclical, which is why Black Friday is so important to them. Still, don’t read too much into Black Friday numbers, according to a story in MarketWatch, which said retail reports coming out after the shopping holiday tend to cloudy the consumer discretionary stock picture, not make it more clear.
The phrase “Black Friday” to signify a positive boost in retail sales didn't grow in use nationwide until the late 1980s, when merchants started to spread the red-to-black profit narrative. Black Friday was described as the day stores began to turn a profit for the year.
Since that time, Black Friday has lost a bit of its luster as retailers have spread sales throughout the holiday shopping season and internet sales have cut into the importance of the single day. Still, the holiday shopping season is hugely important. An estimated 166.3 million people are planning to shop this year during the period that stretches from Thanksgiving Day through Cyber Monday, according to the annual survey released by the National Retail Federation and Prosper Insights & Analytics. That represents 69% of all holiday shoppers.
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