Markdowns and shoppers were out early this season. What does that mean for retailers?
- Dec 03, 2004
- admin
- Investing
THEY CALL IT BLACK FRIDAY for good reason.
It is this particular Friday, the Friday that follows each
and every Thanksgiving, that lets retailers know if they’re
income statements will indeed be black.
Black is good. Black means higher profits. Higher profits mean
higher stock prices. Higher stock prices mean stock options
that are, well, in the black.
And what a black Friday it was.
You saw the pictures. Shoppers braving the elements to bum-rush
Gap, Sears and H & M in search of the latest markdowns.
Hair flying. Elbows hitting. It reminded me of a mosh pit.
It seemed that the retailers – who’ve been worried about a weak
holiday season all year – we’re wise with the markdown strategy.
On Friday evening ShopperTrak, a national survey firm,
said that sales for the day rose an estimated 10.8 percent
over last year to appx. $8 billion.
Analysts & retailers proudly hit the talk show circuit
Friday nite to declare that the 10 percent rise in
spending was a combination of the modest “drop” in oil
prices combined with the recent rise of the stock market.
Retailers began to secretly cross their fingers…dreams of
stock options dancing in their head.
All seemed good.
And than came Saturday. And Sunday.
It was as if all of the shoppers who partied on Friday suddenly
remembered that oil is 100 percent higher than it was
a year ago Black Friday.
And that prices at the pump haven’t fallen.
And that the stock market hasn’t really moved during the year.
And that their adjustable-rate mortgages were creeping up with
interest rates.
So for the rest of the weekend they rested. The post shop
hangover must have been severe.
First Binge. Than Purge. Some of you know what I mean.
By Monday the “smart money” was back on the talk show circuit
questioning the strength of the shopping season again.
It seems that their old research was wrong.
It’s not discounts that people were running to. It’s discounts
they were running from.
Wal-Mart is out. Coach is in.
Brand names galore. Fewer, but more expensive gifts.
At least for now.
And so we await the cycle to begin anew next weekend.
Too much drama for me.
Guess what I did this weekend? I slept.
I slept because Tycoon is knee-deep in companies with strong
brand names.
Strong brand names mean people want their products.
Strong brand names mean pricing power. Pricing power means
higher profits. Higher profits mean higher stock prices.
Higher stock prices mean, well, Tycoon subscribers who are, well
in the black for the year.
Yea, I slept pretty well last weekend.
Can you guess what I plan to do this weekend?
Enjoy,
–Dylan Jovine