Abercrombie & Fitch (ANF) is about to salvage at least some of its forgettable year for investors, while Best Buy's (BBY) magical turnaround is set to take a hit.
For Abercrombie, the past few months have been marked by weak sales and bad publicity, the latter led by years-old remarks from the company's CEO in which he noted a clear preference that his clothes' buyers be trim and attractive. Meanwhile, Best Buy has seen a rebirth, thanks to a new focus on stores that's designed to brighten up your TV-and-speakers shopping experience.
That's paid off for Best Buy's shares, which have bolted ahead by a whopping 226.7%, making the stock the second-best performer in the S&P 500 so far for 2013. Going the opposite way is Abercrombie, having slumped 27.1%.
But have we arrived at reversal time? Over the past 10 years, going long the teen-apparel merchant has reaped an average gain of 5.8% during the annual holiday shopping spree, a move that, if repeated in 2013, would mean a little cheer is coming for stockholders sitting on a sizable year-to-date loss. At the same time, the big electronics chain was best-played on the short side 80% of the time.
Best Buy is saying there’s still something “special” about Thanksgiving weekend but the takeaway here is that “Black Friday” ain’t what it used to be, as I discuss in the accompanying video with my colleagues Rick Newman and Jeff Macke.
With many chains opening on Thanksgiving Day and Black Friday being moved up a week earlier “it’s a transitional year” for retailers, Newman says. “Black Friday had a great decade, it’s time for something else.”
WMT 79.81 +0.9500 (+1.20%) TGT 63.70 -0.4900 (-0.76%) JWN 62.10 -0.0400 (-0.06%) M 51.26 +0.4500 (+0.89%) JCP 8.87 -0.3000 (-3.27%) KSS 55.15 +0.3500 (+0.64%) TIF 81.08 -0.4200 (-0.52%) KORS 80.64 +0.2000 (+0.25%) BBY 39.37
As Macke notes, Black Friday is a fairly recent phenomenon – prior to the mid-2000s, the Saturday before Christmas was traditionally the biggest day for retailers. The holiday season is moving “earlier and earlier” due to the pressure of the Internet and price discovery,” he says.
And it’s not just the pressure from industry titan Amazon.com (AMZN). 'Brick and mortar’ retailers are trying to become more relevant online, Macke adds. “You have Walmart.com (WMT) and Sears (SHLD) is all about becoming a dot.com. A website is open 24/7, 365.”
The name "Black Friday" originated in Philadelphia, where it originally was used to describe the heavy and disruptive pedestrian and vehicle traffic which would occur on the day after Thanksgiving. Use of the term started before 1961 and began to see broader use outside Philadelphia around 1975. Later an alternative explanation was made: that retailers traditionally operated at a financial loss from January through November, and "Black Friday" indicates the point at which retailers begin to turn a profit, or "in the black". For large retail chains like Walmart, their net income is positive starting from January 1, and Black Friday can boost their year to date net profit from $14 billion to $19 billion
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