The Ratings Game: Cyber Monday could have the ‘best deals of the season’
There was no shortage of promotions over the Thanksgiving holiday weekend, but MKM Partners analysts say Cyber Monday could outdo the previous shopping days.
“With a handful of Cyber Monday promotions in effect on Sunday, our sense is that retailers are preparing to set new records in Cyber-event sales, with Cyber Monday projected to be the largest online shopping day in history; we wouldn’t be surprised to see the best deals of the season on this day,” wrote Roxanne Meyer in a Monday note.
Adobe forecasts $ 6.6 billion in online sales on Cyber Monday, up 16.5% year-over-year.
Adobe advised that shoppers wait until Cyber Monday to make their toy purchases. However, items like teddy bears and Hatchimals were popular over the holiday weekend.
Read: 6 things NOT to buy on Cyber Monday
Analysts say apparel was also a standout, with certain names including Lululemon Athletica Inc. LULU, +0.43% , L Brands Inc.’s LB, +3.29% Victoria’s Secret, Ulta Beauty Inc. ULTA, -1.49% , Urban Outfitters Inc.’s URBN, +0.17% namesake and Anthropologie chains, and Gap Inc.’s GPS, +2.23% Old Navy brands among the winners.
Wells Fargo analysts called apparel pricing a “positive surprise” due to lower discount levels.
“On the heels of leaner inventory and favorable weather, just 19% of apparel retailers appeared ‘more promotional’ this year (a dramatic improvement from 80% last year… yes 80%) while 19% appeared ‘less promotional’ ( a step up from 12% last year),” wrote analysts led by Ike Boruchow.
Read: S&P 500, Nasdaq inch up to records as retailer rise on Cyber Monday
Handbags were a mixed category, according to Wells Fargo with Tapestry Inc.’s TPR, -0.47% Coach brand the most promotional compared to last year and Michael Kors Holdings Ltd. KORS, +0.26% showing “the most restraint.”
Michele Dupré, group vice president for retail, hospitality and distribution at Verizon Enterprise Solutions, notes that the focus has shifted away from Black Friday, making it crucial for retailers to appeal to customers throughout the season.
“Now, thanks to easily customized offers and other ways to personalize the experience, shopping starts in early November and continues to December 24,” Dupré said in a statement.
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ShopperTrak data shows that brick-and-mortar retail visits on Thanksgiving and Black Friday were down a combined 1.6%. Analyst were pleased despite the decline.
“Our biggest surprise was mall traffic, which was above our expectations despite online continuing to gain broad-based momentum,” wrote SunTrust Robinson Humphrey analysts led by Pamela Quintiliano, who called the weekend a “big win” for brick-and-mortar given the huge gains in e-commerce.
See also: Black Friday online sales reach record $ 5 billion
In addition to Old Navy, American Eagle Outfitters Inc. AEO, +2.66% and Express Inc. EXPR, +4.74% are two of SunTrust’s weekend winners while “traffic at J. Jill Inc. JILL, +1.25% was the most challenged.”
“While online remains the key avenue for growth (Adobe reports 16.9% growth year-over-year),” notes KeyBanc Capital Markets analysts, “the rapid erosion in physical store sales may be abating.”
Analysts said sales of cold weather gear like sweaters and jackets was strong, a good omen for apparel broadly and G-III Apparel Group Ltd. GIII, +1.27% specifically, whose brands include Calvin Klein, Donna Karan and Andrew Marc.
Despite the continued focus on holiday shopping and the fourth quarter, Instinet analysts led by Simeon Siegel think the quarter’s significance is “shrinking.”
“For all the talk about Black Friday turning into Black November, it is critical to note the importance of the fourth quarter in its entirety has been diminishing over the past several years, with last year’s fourth quarter sales contribution to the fiscal year down at about 29% of fiscal 2016 sales and gross profit dollars,” Instinet wrote.
The SPDR S&P Retail ETF XRT, +0.28% is down 10.2% for the past year, but up 6.6% for the last three months. The S&P 500 index SPX, -0.06% is also up 6.6% for the last three months, while the Dow Jones Industrial Average DJIA, +0.11% is up 8% for the period.