Black Friday optimism may be misplaced this year: Morning Brief

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Monday, November 21, 2022

Today’s newsletter is at Brian Sozzigreat editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Read this as more market news unfolds Yahoo Finance App.

Hope is in the air, based on some early Black Friday predictions.

Mastercard SpendingPulse sees Black Friday sales rising 15% year over year, while Walmart sees its US division posting a 3% increase in same-store sales in the fourth quarter.

But the former retail analyst in me thinks companies and investors will have a relatively weak holiday shopping season for one big reason: Inflation remains omnipresent on consumers’ minds.

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Therefore, 15% Black Friday sales growth is a huge call in an economy that is barely growing, and Walmart’s attitude is quite aggressive since Thanksgiving dinner will cost 20% more this year.

Other data corroborate this view: In a new Goldman Sachs survey, around 55% of respondents said they plan to buy fewer items this year as a result of the challenging macroeconomic backdrop. Some consumers plan to not only buy less, but also trade down to cheaper price points and quality levels.

Another survey by Citi found that all income brackets indicated they planned to spend less, with the largest percentage of respondents saying the decision was due to less money and high prices fuel and food.

It makes sense based on what retail execs are telling me.

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“I think we’re going to be operating in a very uncertain environment,” Target Chairman and CEO Brian Cornell told me. So we’re going to be preparing for that.”

Walmart Chief Financial Officer John David Rainey told me that consumers are “looking for value,” as if to imply that the shopper will leave an item on the shelf if the value equation isn’t right.

A statue of Santa Claus is seen next to a sale sign during Black Friday sales at the Eagle Rock Plaza in the Eagle Rock area of ​​Los Angeles November 26, 2010. U.S. shoppers searched for deals on high-definition televisions and popular toys early Friday, as retailers hoped Black Friday would kick off the best holiday shopping season in three years.  REUTERS/Phil McCarten (UNITED STATES - Tags: BUSINESS)

A statue of Santa Claus is seen next to a sale sign during Black Friday sales at the Eagle Rock Plaza in the Eagle Rock area of ​​Los Angeles November 26, 2010. REUTERS/Phil McCarten (UNITED STATES – Tags: BUSINESS)

I think you’ll hear an equally dour vibe from Best Buy’s earnings later this week.

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All of this will be discussed at my “Rockin’ Retail Special” which will be broadcast live today on Yahoo Finance at 2PM ET. I’ll be based at the Oculus in NYC with an all-star lineup of retail experts, including former Gap and J Crew CEO Mickey Drexler.

So tune in to, our YouTube channel, or the Yahoo Finance app for Apple or Android – in any case, be sure to pick your retail stocks carefully this season.

In the meantime, Happy Trading!

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