While in Romania Black Friday has become a shopping theme and is continuing for some companies to the end of November, America is preparing for its start of the holiday shopping season, with November 24 seen as a crucial day for retailers.
Despite a retail sales report that shows a decrease month-to-month, Americans are still spending money at a healthy rate, even when you factor in inflation, writes eToro analyst for Romania, Bogdan Maioreanu.
In Romania retail sales fell in September 0.7% from a month earlier, but increased 0.7% year on year. Sales continued to rise for food & non-alcoholic beverages (3.4% vs 2.7% in August), with sales increasing 15.7% in specialized stores and 3.6% in non-specialized stores. Also, trade picked up for non-food products (3.1% vs 1.5%), driven by sustained sales growth in specialized stores (3.3% vs 2.1%). But these figures are likely to improve in the last two months of the year as the holiday season shopping starts. So far, preliminary data from Black Friday sales from the largest online retailer eMag is showing an increase in sales compared with last year.
The US retail sales adjusted for seasonality but not inflation, fell 0.1% in October from the prior month, but rose 2.5% year on year, the Commerce Department reported yesterday. However, America is preparing for Black Friday on the last Friday of November that follows the Thanksgiving holiday and the start of holiday season shopping and the estimates are of consumer spending growth.
The US National Retail Federation is estimating that Holiday sales for this year will increase by 3 to 4%. This is lower than the 5.4% increase last year. But not all retail sectors will grow the same. Online and other non-store sales are expected to increase between 7% and 9% to a total of between $273.7 billion and $278.8 billion. That figure is up from $255.8 billion last year.
According to Deloitte Holidays shopping survey, 95% of US consumers are planning to shop for holiday this year, versus 92% last year and 88% in 2021. Also, they are increasing the average expected holiday spend to $1652 a 14% year on year increase from the $1455 last year. But the way people are spending their money is different from 2022. The gifts spending is estimated to increase 9%, the experiences spending 10% but the biggest increase is in the non-gifts category that includes clothing for self and family, home furnishings and holiday decorations.
Consumer and Producer Price Indexes and retail sales reports were also good news for big retailers stocks and investors alike. Target Corp. (TGT) topped expectations with its Q3 earnings report. The retailer’s margins improved notably even as total sales and comparable sales fell from a year ago. The company’s operating margin rate rose to 5.2%, while the gross margin rate also demonstrated substantial growth, reaching 27.4% compared to 24.7% a year ago, reflecting reduced markdowns and other inventory-related costs, lower freight expenses, decreased supply chain and a favorable category mix. As the holiday season approaches, Target is prepared. The retailer intends to bring in over 100 thousand seasonal hires, created offers for Black Friday and is having over 10000 new items across all stores. Target also decreased by 14% their inventory position compared with last year. As a result, investors found a renewed interest in the retailer, its stock price increasing over 17% yesterday.
Now investors’ eyes are turned over rival Walmart that will report tonight. So far Target shares dropped over 25% in the past 12 months, but Walmart gained 15% in the same period. But the stock of the largest retailer by market capitalization, Amazon, managed to gain almost 45% in the last year.
