Analysts Mixed On Holiday Sales Outlook
Will investors looking for significant year-over-year improvment be disappointed?
While shopping held steady over the Thanksgiving weekend compared with last year, economic pressures remain as shoppers worry about unemployment levels. Consumers continued to hunt for bargains, with many sticking to their shopping lists and focusing on practical items.
Randal Konik of Jefferies & Co. said in a client note that nearly all specialty retailers appeared to be less promotional on Black Friday this year, which should lead to better margins and higher fourth-quarter earnings.
Konik said Gap Inc. (GPS) did well, with strong pricing and a solid ad campaigns for its Old Navy and namesake stores. Teen retailers were the best Black Friday performers, he added. Konik's top holiday picks are Abercrombie & Fitch Co., (ANF) Coach Inc., (COH) Gap, and Urban Outfitters Inc. (URBN).
Mike Baker of Deutsche Bank North America (DB) said it wasn't surprising that dollar stores were among the busiest retailers this weekend, as shoppers have consistently shown this year that they are trading down to less expensive items. In consumer electronics, shoppers appear to be concentrating on new video games and flat panel televisions, he added.
Janney Capital Markets' Shawn Milne added that Black Friday appeared to be a good day for online retailers, with early signs indicating their sales were up more than 10 percent from last year. Milne said the strong sales may have been because many retailers put more of their Black Friday and Cyber Monday deals on their websites earlier this year.
But Edward Yruma of KeyBanc Capital Markets remains reserved, saying his checks showed traffic tapered off on Friday and was "tepid at best" over the weekend.
"While the weekend still pales in importance to the weekend before Christmas, we think that investors looking for significant year-over-year improvement could be disappointed," he wrote.
Yruma also likes Gap and Abercrombie & Fitch, with Tiffany & Co., (TIF) Nordstrom Inc. (JWN) and Lululemon Athletica Inc. (LULU) also among his holiday favorites.
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