Strong Holiday Sales Signal Growth; Key Retailers Stand Out for Investors

Think of Black Friday shopping like a big sports game—everyone is trying to score the best deals, and some teams (stores) play smarter than others. This year, how shoppers spent their money is important, especially for investors who want to know which companies are winning or losing in the retail world.

Why Black Friday Matters for Investors

Black Friday is not just about grabbing a new TV or sweater. For investors, it’s a key moment that shows which companies are attracting shoppers and growing sales. It’s like a report card for retailers and a hint about which stocks might do well in the coming months.

Black Friday Winners: Who Did Well?

• Omnichannel Retailers: Stores that sell both online and in-person, like Walmart, Target, Costco, and Amazon, saw big crowds and lots of sales. Their mix of websites, apps, and stores made shopping easy and convenient.
• Beauty Companies: Ulta Beauty was a standout, with busy stores and steady promotions. e.l.f. Beauty also saw strong demand, especially in stores that carry their products.
• Apparel and Electronics: Stores like Best Buy (for computers and phones), Gap’s brands (Banana Republic and Old Navy), and Hollister (owned by Abercrombie & Fitch) had more items sold per shopping trip compared to last year. Gap’s sales jumped 20% in the past month, showing strong momentum after a successful campaign.

This year, U.S. shoppers spent a record $11.8 billion online during Black Friday—a 9.1% increase from last year, according to Adobe Analytics. Shoppers even paid 8% more for items than last year, based on a Reuters report.

Why Some Are Cautious: The Bear Perspective

• High Prices and Inflation: Prices are up, and not everyone can keep up. Some analysts worry that shoppers are only spending during big sales, not all season long.
• Possible Slowdown: After Black Friday’s rush, there’s often a lull before the final holiday push. If shoppers feel squeezed by high prices, they might pull back in December.
• Mixed Results for Some Stores: Abercrombie & Fitch’s main brand struggled earlier in the year, though its Hollister brand bounced back recently. Target has also had a tough time, with sales dropping for about four years.

Even though Black Friday was strong, there’s still “significant uncertainty” about whether shoppers can keep spending at these higher prices, according to Bank of America. History shows that after a big Black Friday, December can be weaker if people have already finished their shopping early (source: National Retail Federation).

Bullish Signs: Reasons to Be Hopeful

• Steady Demand in Key Sectors: Beauty and wellness products are doing well, especially with people thinking about New Year’s resolutions.
• Improved Shopping Experience: Faster deliveries, curbside pickup, and easy returns have made shopping smoother, drawing more people to omnichannel stores.
• Promotions Driving Sales: Big discounts and early sales (some starting in October) brought in shoppers who might have otherwise waited or spent less.

Some experts believe these trends could keep sales strong through the rest of the holiday season, especially for stores that offer convenience and value.

Investor Takeaway

• Watch for retailers with both strong online and in-store sales—these companies are set up to do well even if shopping habits change.
• Keep an eye on beauty and wellness brands, as they’re showing steady growth and could benefit from New Year’s resolution spending.
• Be cautious with companies that rely on deep discounts. If shoppers only buy during sales, profits could be squeezed.
• Check for stores with rising foot traffic and inventory that isn’t piling up, which are good signs for future sales.
• Remember that a strong Black Friday doesn’t always mean a strong December—watch for signs of a slowdown as the holidays continue.

For the full original report, see CNBC