Here are highlights from Wednesday's Analyst Blog:
Are Retailers Closed on Thanksgiving Losing?
On the eve of a long weekend, opinions over shopping on Thanksgiving remains firmly divided. At the same time, Thanksgiving shopping is even more significant this time around. Buying on this holiday has become an emerging trend and one which is likely to stay.
Opposition to Remaining Open
The issue of stores remaining open on Thanksgiving has been played up by a movement, largely dependent on social media. This includes pages on Facebook, Inc. (Nasdaq:FB-Free Report) such as Boycott Black Thursday and Boycott Shopping on Thanksgiving Day. The idea is to reclaim Thanksgiving as a day to spend at home eating with the family rather than shopping. Consumers can then be free to shop on Black Friday.
Certain stores have taken a principled stance on the issue and are remaining closed. The TJX Companies, Inc. (NYSE:TJX-Free Report) for example, has said that it is "pleased to give our associates the time to enjoy the Thanksgiving holiday with family and friends." Costco Wholesale Corp. (Nasdaq:COST-Free Report) will also remain closed and has said: "Our employees work especially hard during the holiday season and we simply believe that they deserve the opportunity to spend Thanksgiving with their families."
"We want our booksellers to have the opportunity to enjoy what is a family holiday," said a spokesperson from Barnes & Noble, Inc. (NYSE:BKS-Free Report).
Strategy to Remain Closed
These companies wish to signal that they are more sensitive to workers' needs. The idea is to indicate that those remaining open are not really bothered about families and American customs.
For other retailers, the need to remain open is simply irrelevant. This is particularly true of those who are not focused on high volumes since margins are low. Upmarket brands like Nordstrom Inc. (NYSE:JWN-Free Report) are those which fall into this category. Others like The Home Depot, Inc. (NYSE:HD-Free Report) are not known for doorbuster sales and have chosen to give employees the day off.
Need to Stay Open
But the likes of larger retailers like Wal-Mart Stores Inc. (NYSE:WMT-Free Report), Target Corp. (NYSE:TGT-Free Report), Macy's, Inc. (NYSE:M-Free Report), J. C. Penney Company, Inc. (NYSE:JCP-Free Report) and Best Buy Co., Inc. (NYSE:BBY-Free Report) have no choice but to stay open. This is because they thrive on promotions and are consistently competing to grab a share of the same pie.
Holiday shoppers with constrained shopping budgets are likely to spend their dollars elsewhere if shops choose to remain closed. This is also indicated by price-matching strategies and early Black Friday sales. All of this shows that stores of this nature are unwilling to relent by giving employees the day off.
The flip side of this argument is that the choice of remaining open on Thanksgiving may not be affecting holiday sales at all. Analysts have indicated that retailers are eating into overall sales by remaining open on Thanksgiving. If they had remained closed, those purchases would possibly take place on Friday. The choice to provide promotions well ahead of Thanksgiving may be the primary reason for declining Black Friday sales.
At the same time, the choice of remaining open or closed on Thanksgiving will have little impact on overall holiday sales. If consumers do choose to stay home this weekend, they will continue to shop in the weeks ahead. Additionally, those who actively boycott stores will probably opt to shop online.
Stores Open vs. Stores Closed
The following chart compares the Zacks Rank, and current and next quarter earnings estimates over 30 days of stores that are planning to remain open versus ones giving their employees the day off.
All stocks in both the charts carry a Zacks Rank #3 (Hold), except for Best Buy that holds a Zacks Rank #2 (Buy).
Current Quarter Earnings Estimate
Next Quarter Earnings Estimate
$1.54 (down 2 cents)
$1.13 (down 2 cents)
$1.31 (down 2 cents)
39 cents (down 3 cents)
$1.21 (down 2 cents)
87 cents (up 1 cent)
$2.37 (down 19 cents)
71 cents (up 4 cents)
10 cents (down 7 cents)
79 cents loss (widening 2 cents)
Current Quarter Earnings Estimate
Next Quarter Earnings Estimate
$1.36 (down 8 cents)
79 cents (unchanged)
89 cents (unchanged)
$1.15 (up 2 cents)
91 cents (down 3 cents)
73 cents (unchanged)
Barnes & Noble
17 cents (unchanged)
Comparing these charts we find that stores closed are better placed in terms on estimate revisions than those choosing to stay open. This implies that those remaining open on Thanksgiving may have little choice but to do so. Competition is intense and the risks of taking the day off are too high to ignore.
On the other hand, those remaining closed may have little to gain from additional sales. This may be because they are already ahead of their competitors. Alternatively, it may make little difference to them if they chose to remain open on Thanksgiving.
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