MARKET UPDATE

12.02.20

JENSEN GUTZWILLER

Black Friday


The history behind the name: In the 1950s, the widely known name “Black Friday” came to be after Phili police began describing the chaos after the Thanksgiving holiday when crowds would storm Philadelphia for the Army-Navy football game adding to the already large holiday masses. It didn’t catch on as a retail holiday or nationally recognized term until the mid 80’s when stores realized they could also tie the title into the idea that Black Friday also represented the shift from red to black (red=operating at a loss & black=earning a profit) to promote spending for the upcoming holidays. 

 

With a “different” kind of year comes a “different” black friday. With the shift to e-commerce and pickup, retailers saw less in store (post turkey) purchases. Lines outside big name brands looked slimmer. However, with economic stability slowly returning and positive vaccine news from both Pfizer and Moderna, hopeful outlooks fuel the holiday season from both consumer and retailer perspectives. 

Catalysts: 

  • Decrease in unemployment (6.9% as of October)

  • Increase in mean household income

  • Savings from decreased expenses associated with typical travel, retail, dining out, going out, gas and other expenses increase savings that can go towards holiday spending (personal savings rate hit a historic 33% in April and has only continued with continuing closures and economic uncertainty)

  • Psychological factors that boost desire to spend to “make up” for the past 10 months

 

The National Retail Federation expects that holiday sales will grow be between 3.6 and 5.2% to as much as $766.7 billion in the US.
 

“After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday.”

Predictions: Adobe expects Black Friday online sales to increase between 20% and 42% from 2019, reaching between $8.9 billion and $10.6 billion.

Post Sale Statistics: 

  • Black Friday 2020 online shopping surged 22% to $9 billion.

  • $6.3 million spent per minute 

  • 40% of all sales were on smartphone devices totalling $3.6 billion and up 25.3% from 2019.

  • In-store and curbside pickup up 52% in 2019 (a sign of the e-commerce space and practices brought along by Covid maturing).

  • Traffic at stores on Black Friday fell by 52.1% compared with last year.

BlackCyberFriMonDay


In years past, the distinction between Black Friday (in store purchases) and Cyber Monday (online purchases) was clear. However, in a COVID world, the majority of spending, because of lockdown and precautionary measures, has been done online either to be picked up in store or delivered directly to your house. With this lessening distinction between sales comes a mish mosh of discount days: more of a BlackCyberFriMonDay, than a Black Friday followed by a Cyber Monday. 

With many retailers recognizing the abnormal spending habits and restraints that come with this year, most online sales that have been saved exclusively for Monday in prior years started Friday and ran weekend long. 

  • Many see Amazon’s Prime Day as a precursor or early bird holiday spending spree. Having taken place on October 13-14th, it kicked off the holiday shopping season with over 10.4 billion in US sales.

  • Walmart put many holiday deals both online and in stores over a longer period to reduce crowds. Products in high demand, such as the PlayStation5, were sold online only.

  • Though sales at many apparel chains are still down compared with a year ago, their inventory has fallen by a greater amount. This allows less discounting and higher price points in response. 

  • According to CEO Patrice Louvet, Ralph Lauren shrunk its online promo period to 10 days compared to 62 days during the same period in 2019 (part of a brand elevation strategy). 

  • Amazon has hired 427,300 new employees in the past 10 months, roughly 1,400 a day (which speaks to the anticipation of a rise in retail). 

 

Predictions: Adobe predicts Cyber Monday 2020 will see spending of between $10.8 billion and $12.7 billion. It is expected to be the largest online sales day in the country’s history. 


Post Statistic: 

  • Americans spent $10.8 billion online on Cyber Monday (a 15% increase from last year) earning it the title of “The largest online shopping day in U.S. history”

  • National Retail Federation reported about 186 million shoppers purchased something online or in-store from Thanksgiving through Cyber Monday (down from 190 million last year)

  • Shoppers spent an average of $312, a 14 percent decrease from $362 in 2019.

 

In general, online sales were not as dominant as analysts predicted–demonstrating the real effects of continued high unemployment and the shift in spending mentalities. From the retail side, what comes with is the widening gap between the largest and most profitable retailers versus the rest.
 
Best Deals and Buys

  • 7 for All Mankind, use code FAM40 to save 40% storewide today.

  • 70% off Alo Yoga’s activewear

  • Reformation 30% off sitewide

  • Banana Republic 50% off the entire website now through November 28

  • Calzedonia legwear and beachwear up to 50% off sitewide and in stores

  • Up to 50% off sitewide at Frye leather footwear

  • Up to 30% off everything at H&M

  • SHOPBOP 20% off of $200+

Stocks to Watch

 

L Brands
Ticker: LB  
Share Price: $38.84
Market Cap: $10.79 Billion


Backstory: Owns Victoria’s Secret and Bath and Body Works.
Current news:

  • The brand is currently looking to completely revamp the Victoria’s Secret segment of the business.

  • The brand is trying to move away from it’s outdated and hypersexualized view of femininity to be more to date, inclusive and reflective of female empowerment and image in 2020.

  • Fourth quarter earnings have been better than expected with increased sales in the sleep and loungewear segments as Covid has inspired a more casual dress trend.

  • L Brands recently named Martin Waters as the new head of its Victoria’s Secret lingerie business (Current head of the international division) to John Mehas who has headed the role since February 2019.

  • L Brands shares are up 116% through this year. 

Ascena Retail Group Inc
Ticker: ASNAQ 
Share Price: $0.27
Market Cap: $2.74 Million


Backstory: New Jersey-based Ascena Retail Group owns Ann Taylor, Lane Bryant, LOFT, Lou & Gray and more. Ann Taylor, the flagship name of the collection, was once a top retailer for women’s professional clothing; the IT store to purchase your first suit at. 
Current news:

  • Ascena filed for Chapter 11 in July.

  • Sycamore Partners (A Private Equity Firm) has agreed to pay $540 million to buy Ann Taylor, Lane Bryant and other store brands.

  • The transaction is expected to be completed by mid- December.

  • Ascena attempted several steps prior to its filing to lessen the blows caused by COVID closures beginning by closing stores in March to lessen expenses.

  • The company sold Justice and Catherine brands out of bankruptcy as online-only businesses.

LVMH Moët Hennessy Louis Vuitton
Ticker: LVMUY 
Share Price: $118
Market Cap: $59.96 Billion


Backstory: The world’s largest luxury conglomerate owning brands from Louis Vuitton to Dom Pérignon, Marc Jacobs, Fendi, Christian Dior and Benefit Cosmetics.

  • Included in Mash 2020 first market update at $96 dollars…. If you had invested your investment would have seen a 23% increase or 23 cents earned to the dollar!

Current news:
Why back for more?

  • For the third year in a row, the top 10 luxury goods businesses with the largest sales remain with LVMH at the top and Kering following.

  • Berta de Pablos-Barbier has been appointed as the new CEO for Champagne houses Moët & Chandon, Dom Pérignon, and Mercier.

  • With wealthier communities less affected by the financial implications of covid and the holiday season approaching, the luxury market is sure to see surges from high end buyers.

Citations:

https://www.businessoffashion.com/articles/retail/l-brands-replaces-victorias-secret-ceo 
https://www.wsj.com/articles/black-friday-deals-become-tamer-as-covid-19-alters-sales-strategies-11606473001?mod=hp_lead_pos7 
https://techcrunch.com/2020/11/28/black-friday-online-sales-numbers/ 
https://www.cnbc.com/2020/05/29/us-savings-rate-hits-record-33percent-as-coronavirus-causes-americans-to-stockpile-cash-curb-spending.html 
https://www.businessoffashion.com/articles/retail/l-brands-replaces-victorias-secret-ceo 
https://www.history.com/news/whats-the-real-history-of-black-friday