Investors are back to work and now that the turkey tryptophan-induced fuzzy feeling has worn off, it's back to reality. The market largely found some solace last week, but make no mistake, the stakes remain high and those stakes are weighing on the market once again today. In addition to that lurking Fiscal Cliff threat, we've now got clues rolling in from Black Friday and the rest of the weekend and it is very important that we manage a good holiday season this year. Of course, all the Wall Street firms had spies set up at the malls, and if you went to the mall yourself you probably could have picked up a clue or two as well watching the traffic at the stores.
Well, if you were to judge just by the market action today, shoppers may not have been so enthusiastic. A gander at the retail action turns up a lot of duds, with just a handful of companies sneaking into positive territory. Some notable losers today include Aeropostale (NYSE:ARO), Ann Taylor (NYSE:ANN), Saks (NYSE:SKS), Macy's (NYSE:M), Coach (COH), and Target (NYSE:TGT). While there's understandably added weight on high-end retail, even the discount big box stores are mostly down too.
Yet, you certainly can't say already that the holiday season was a bust, it's just getting going. The National Retail Federation even estimated the weekend's sales to be up 12.8% to $59.2 billion. It seems some mall traffic was substituted for online shopping, and perhaps an earlier start than usual. On the other hand, you have to wonder how much sales volume was driven by discounts.
In the end, I don't think you can draw a conclusion today, but that uncertainty alone is a little unsettling. After all, many retailers get more than 40% of their profits during the holiday season (a side history lesson, Black Friday gets its name as the day when retailers used to swing to a profit after running at a loss for most of the year) and if you're a consumer you have some questions including whether or not your taxes are going up, and if Federal handouts are going to get slashed. Even if you're bullish you can't help but to wonder if Santa's sleigh is headed off a cliff (of the fiscal variety).
The good news is that Congress, like the Grinch, can give the Christmas spirit it stole back before it's too late. That would mean agreeing on something, and preferably something that doesn't load up Americans with tax increases. I think higher taxes on the rich is pretty much done and dusted, but for the middle class there is still some hope. In fact, the President himself has said he doesn't want taxes to go up for those making under $250,000 and that seems to be finding a consensus in Congress. If they could confirm this before Christmas, I think we could see a last minute burst of shopping. Of course, we'd still have to contend with the payroll tax cut expiring but even that has a chance of being extended for the middle class.
Cyber Monday Falls Short?
In what has become an extremely slow day news wise, the rhetoric surrounding the Fiscal Cliff is pushing the market lower. After the Thanksgiving break, Congress is back in session and now it is all Fiscal Cliff all the time. Despite this overhang, the holiday selling season began with Black Friday. Mr. Urani spoke about that, but today is Cyber Monday, the day when people move to their PCs, laptops, tablets, and mobile phones to purchase that holiday gift. I will say, I purchased a gift this morning (it was an Amazon Deal, which only lasted a few hours), and I will be searching out other deals after work this evening. It is amusing, I googled Cyber Monday and the first two articles were by ABC news "Cyber Monday Likely to Be Busiest Online Sales Day" and by CBS "Does Cyber Monday Matter Anymore?" Even the data within these articles are different. In one article, it says that Cyber Monday has never been the busiest selling day online (that is normally reserved for the few days before Christmas to guarantee delivery, I am going to coin it Procrastinator's Day), while the other article says it has been the busiest selling day for three years running.
According to research firm comScore, Americans are expected to spend $1.5 billion, up 20 percent from last year, on Cyber Monday, as retailers have ramped up their deals to get shoppers to click on their websites. A stunning 247 million people shopped online and in stores from Thursday through Saturday, the most ever, the NRF said in an emailed release today. That compares with 226 million last year. The shoppers spent a total of $59.1 million in stores, or about $423 a person. There is no data that I have found about the average time spent in each store. The average Cyber Monday purchase takes a whopping six minutes! Read that again, SIX MINUTES. Online sales spiked over the weekend as some consumers multitasked; while waiting in line at one store, they purchased another gift on their smartphone or tablet. Online sales rose 16% in the first 23 days of November to $13.7 billion, comScore reported today. Sales on Thanksgiving Day itself increased 32% to $633 million.
Black Friday sales were down as a result of earlier sales (open on Thanksgiving Day) and more online buying, but still, it is hard to see this past weekend as anything but a success for retailers. They have discounted some popular items, but most products are full price. I mean, the average person spent $423 over the weekend.