In the face of what many retailers have claimed will be a highly competitive season with six less days of holiday shopping one would expect this year to have been one of the busiest Black Friday’s of all. Moreover, the majority of retailers offered only 50% discount. This year, crowds showed up on Thanksgiving Evening, but not to same extent as previous years. Anecdotally, this Black Friday has seen a decrease in mall traffic. There is even a noticeable difference in the ease and speed parking at Roosevelt Field Mall and Westbury Plaza in Long Island, compared to last year.
The deals weren’t as impressive either. On the contrary, they were very similar to previous sale events during this year, including Veterans Day and Back-to-School shopping seasons. Still, crowds showed up early on Thanksgiving night at Big-Box stores including Walmart, Best Buy, JC Penney, and Macy’s. The latter looked like a hurricane of shoppers passed through the store. In terms of individual stores, teen retailers were very busy. Similarly, Game Stop opened at midnight and sold out of Xbox One and PS4 within thirty minutes, and check-out lines remained out the door for most of the evening.
Exhibit 1: The Retail SSS, Earnings and Revenue Growth Rates – Q4 2013
Source: I/B/E/S Estimates.
Although shoppers already started their holiday shopping, most indicated that they expect retailers to offer juicer promotions later in the holiday season. As a result, many are waiting for later in the season to finalize their shopping list.
Still, electronics are always a favorite during the holiday season. According to the Reuters/Ipsos Holiday poll, 25% of respondents prefer the Apple iPad when it comes to purchasing a tablet. As a result, StarMine analysts are predicting a 6% jump in revenue for Apple, and an impressive 10% jump in iPad sales. Lines started forming as early as midnight for the Apple store. The retailer knows it has a very loyal customer base, and didn’t open earlier than usual. Instead, it opened the same time as previous Black Fridays at 5AM.
Likewise, Urban Outfitters’ Free People division is a popular destination spot. The division has the highest Same Store Sales estimate in our retail universe at 15.6% for the holiday season. Free People has a loyal customer base, and has scored with unique on-trend merchandise. What’s more, analysts rave about Free People’s inventory levels and its ability to sell merchandise at full price.
When looking at the earnings growth rates for the holiday season for the 129 retailers, Internet retailers are on top.
Exhibit 2: The Retail Earnings Growth Rate – Q4 2013
Source: I/B/E/S Estimates.
Within that group, Amazon is the one to watch. ChannelAdvisor indicates strong 48.5% Same Store Sales gains in Thanksgiving e-commerce traffic for the online giant. Looking toward Q4 2013, analysts’ consensus earnings estimate is $0.66 per share. According to a five-star analyst with a very accurate rating, its EPS could be as high as $0.69. A $0.66 EPS would be a 216% growth rate in earnings. For Q1 2014, analysts included in the StarMine SmartEstimate say Amazon expects to see a 200% jump in earnings.
Still, the overall holiday sales outlook is not robust. The Same Store Sales Index is looking at a 1.7% growth estimate for Q4 2013. While the 1.7% SSS estimate is slightly stronger than last year’s 1.6% SSS result, it’s still below the 3% healthy mark, suggesting spending will be modest.
For more on analysts’ changing views of the holiday season, please watch this interview with analyst Jharonne Martis.
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