Record sales over the Black Friday weekend have set a positive tone for the holiday selling period and likely also have helped to deliver a solid finish for retailers' November sales.
Retailers' comparable chain store sales, to be released on Thursday, are expected to see a gain of 3.1%, following a strong 5.5% increase a year earlier, according to Retail Metrics.
According to the National Retail Federation, a record 226 million shoppers hit the stores and websites over Black Friday weekend, with the average shopper spending 9.3% more to about $400 and pushing the total spending to a record $52.4 billion.
With the strong showing, analysts have since raised their average estimate by 0.3 percentage point since the beginning of the month. Black Friday weekend alone represents about 20% to 30% of most retailers' November sales, Retail Metrics said.
"Strong Black Friday sales results should bode well for November" sales, said analyst Sam Panella at Raymond James.
In the face of macroeconomic concerns that have made shoppers more budget conscious, retailers pulled out all stops to attract shoppers' holiday attention early.
Wal-Mart Stores Inc. (WMT) moved its Black Friday specials event to 10 p.m. on Thanksgiving Day instead of midnight on Friday. Target Corp. (TGT) , Best Buy Co. (BBY) , Kohl's Corp. (KSS) and Macy's Inc. (M) opened their doors at midnight, setting a trend of retailers moving the annual Black Friday frenzy to a late night marathon after Thanksgiving dinner.
Analysts said the late night openings also have helped to bring out more younger shoppers.
To better compete with online retailers, brick-and-mortar retailers this holiday season released their Black Friday specials earlier than ever and began to promote other holiday deals also early in the season before Thanksgiving, to entice shoppers to open their wallets early.
Wal-Mart and other retailers also have been more aggressive on price-matching guarantees, layaway policy and free shipping offers.
"Retailers launched a full scale attack on consumers this year in an attempt to capture early Holiday sales," said Ken Perkins, president of Retail Metrics. They "stand a good chance of surprising on the upside."
Overall, the discount sector is expected to be the winner, posting a 4.7% increase. That estimate excludes results from Wal-Mart, which doesn't report monthly sales anymore. Including Wal-Mart, sales in the segment are expected to be up 2.5%, Retail Metrics data showed.
Membership warehouse club Costco Wholesale Corp. (COST) is expected to see a 6.6% increase. Still, any miss by Costco, which didn't open stores early or promote much for Black Friday, may hurt retailers' total November tally, Retail Metrics said.
Teen segment also is expected to be a winner, with a 4.1% increase expected. American Eagle Outfitters Inc. (AEO) shares rose 4.2% Wednesday after it reported a better-than-expected third-quarter profit and its fourth-quarter holiday outlook topped Wall Street expectations. The chain offered 40% off across stores on Black Friday.
Still, not all of the indications are rosy. While warmer weather helped to bring out traffic during the Black Friday weekend and other days, that likely hurt shoppers' appetite for cold-weather merchandise. The adult apparel segment is only expected to see a 1.8% increase while the department store segment a 2.2% gain.
"The record Thanksgiving weekend sales are bumping up expectations for all of retail," said analyst Mark Montagna of Avondale Partners, adding he expects retailers such as Ross Stores Inc. (ROST) and TJX Cos. (TJX) to top expectations. Still, "we hope to glean information from each retailer regarding sales of heavier weight product like sweaters, coats, gloves, scarves, and boots."
Ross is expected to post a 3.4% increase while T.J. Maxx parent TJX a 3.9% gain.
The record Black Friday weekend sales also may have come at the expense of gross margin, analysts said.
Despite a strong November finish, a bulk of retailers' fourth-quarter still doesn't come until December, analysts said. Outside of Black Friday, four of the top five selling days fall in December, according to ShopperTrak.
The holiday quarter is key to the industry and could generate more than half of annual profit for electronics, jewelry and other retailers.
Men's clothing retailer Jos. A. Bank Clothiers Inc. (JOSB), whose stock has outperformed the sector, saw its shares down 6% on Wednesday after it said its fourth-quarter business has started out more slowly than it anticipated with a decline in November comparable sales.
The largest U.S. clothing chain Gap Inc. (GPS) is expected to see a 4.4% drop, hurt by declines at both its namesake and discount Old Navy chains. The company again kept open about 1,000 stores on Thanksgiving.
Gap, which this year offered promotions of up to 60% off, didn't drive the same level of traffic compared to last year when it offered the entire store 50% off until 10 a.m. on Black Friday, Panella said.
Among the department stores, Macy's, Nordstrom Inc. (JWN) and Saks Inc. (SKS) are expected to generate gains of 4.1%, 5.1% and 5.9% each. J.C. Penney Co. (JCP) , on the other hand, is expected to see a 1.4% drop as analysts said the mid-priced department store chain's decision to open stores at 4 a.m. instead of midnight may have cost it some sales and traffic.
Meanwhile, while luxury segment is expected to continue to outperform, there are worrying signs of slowing down by luxury shoppers amid market volatility and Wall Street layoffs and reduced holiday bonuses, analysts said. .
Jewelry retailer Tiffany & Co.'s (TIF) stock was sold off on Tuesday after the company gave a tepid holiday outlook. It said it's seen some sales weakness in Europe and in the eastern part of the U.S. with a major part of growth led by Asian tourists.
"Tiffany's conservative guidance points to a luxury consumer that is seeing some signs of slowing. said analyst Edward Yruma of KeyBanc Capital Markets.
-Andria Cheng; 415-439-6400; AskNewswires@dowjones.com