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Is "Black Friday" a Thing of the Past?

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Friday, November 25, 2022

We take a gander at a half-session trading day from the pre-market, where futures are flat: the Dow is just in the green, the Nasdaq just in the red and the S&P 500 carrying a zero-balance. A long Thanksgiving Day weekend is already having an effect on trading volume, and with no economic reports or Q3 earnings releases to be had either ahead of or after the bell today, our sails are still this morning.

Normally — or, at least, over the past few decades — today would bring us the retail phenomenon referred to as “Black Friday,” where early holiday shoppers would get a jump on the hottest gift merchandise and the deepest discounts. Going back to the origins of the Macy’s (M - Free Report) Day Parade nearly 100 years ago, the Friday after Thanksgiving was considered the first day for holiday shopping season.

However, as anyone who has visited a publicly traded drugstore or discount retailer since October can attest, holiday shopping season seems to start earlier and earlier each year. And with e-commerce shopping — and sales — taking an ever-bigger bite out of overall retail shopping totals every year, the days of your aunt lacing up her running shoes after enjoying a turkey meal with the family are pretty much over.

Expectations for Black Friday this year are for roughly $13 billion in merchandise moved on this momentous shopping day, down -7.4% from 2021 (according to BlackFriday.com). Interviews with shoppers in the stores already reveal fewer discounts than in the recent past at select stores; this may mean those Black Friday discounts will come later in the shopping cycle, when inventory levels risk being a problem for the stores, so soon after post-Covid inventory levels have finally gotten back on track.

Then again, supply-chain issues and higher fuel costs from a year ago might mean discounted goods for the holidays may cut into profit margins more notably than in previous years. It’s thus a delicate balance between supply and demand that always aligns with an economy that has its share of challenges, such as inflation and relative job insecurity. For one thing, consumers are already reportedly racking up credit card debt, so soon after recording record-high savings rates during the pandemic era.

The numbers reported after this weekend — and we may as well include Cyber Monday in the equation, as well — will tell the tale, but expectations are skewing toward the positive at this stage: the SPDR S&P Retail ETF (XRT - Free Report) , while down slightly this morning, is up +5.6% over the past five trading days. That spells a fairly robust picture for 2022 holiday shopping season. And the stock market could sure use a rally heading into the final month of the year.

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