Retail Stocks Are Little Changed This Black Friday

(Bloomberg) -- The S&P 1500 Retailing Index is little changed on Black Friday amid some early reports that foot traffic has not been robust as shoppers may be staying home to do their holiday buying.

The index is up 0.1 percent, after rising as much as 0.47 percent and declining 0.29 percent. Investors are keeping a skeptical eye on the sector after third-quarter results disappointed. Prints earlier this week “were not good enough” to overshadow fears around tough comparisons ahead and margin pressure, according to Cowen analyst Oliver Chen. “There’s a wall of retail worry on margin rate pressure with respect to digital, fulfillment, labor, and new supply chain costs,” he wrote in a note.

This “wall of worry” may only rise with indications of growing online sales, which could pressure margins further. Retailers including Walmart Inc. and Target Corp. have to compete with the likes of Amazon.com Inc., where shouldering margin-eroding shipping fees are commonplace.

Online spending Thanksgiving day was up 28 percent from a year ago, Adobe Analytics said, reaching about $3.7 billion, above the predicted $3.35 billion. The firm listed the top five selling products as Nintendo Switch, Beats headphones (Apple Inc.), Hot Wheels (Mattel Inc.), Red Dead Redemption 2 video game (Take-Two Interactive Software Inc.), and Hatchibabies (Spin Master Corp.).

Adobe, which will provide updated results throughout the weekend here, is measuring transactions from 80 of the top 100 U.S. online retailers.

Elsewhere, KeyBanc Capital Markets wrote that store traffic seemed weaker year-over-year, due to a “continued shift online.”

Analyst Edward Yruma, citing the KeyBanc commerce team’s multi-state Thanksgiving and Black Friday store checks, told clients in a note that Walmart Inc., Old Navy and Bath and Body Works appeared to be initial winners, with each having doorbuster promotional items “that resonated strongly with consumers.” Target, Urban Outfitters, and Gap were in line, while traffic at Victoria’s Secret and Nordstrom “seemed a little soft.”

On Bloomberg TV this morning, the National Retail Federation’s President and CEO Matthew Shay acknowledged that Black Friday and this weekend are “an emotional kick off” to the holiday season, even though in actuality promotions began earlier in the month.

He reiterated the firm’s forecast for November and December retail sales, excluding automobiles, gasoline and restaurants, to rise between 4.3 and 4.8 percent to $717.45 billion to $720.89 billion, on top of the 5.3 percent advance seen in 2017.

S&P 1500 Retailing Index top winners as of 11:32am, include Caleres Inc., Kirkland’s Inc., Big Lots Inc., while losers were led by Zumiez Inc., Francesca’s Holdings Corp. and Kohl’s Corp.

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