America’s top retailers reported strong sales last quarter, and retail analysts believe the trend will continue on Black Friday and throughout the holiday season.
So far, so good: Online shopping between Wednesday and until 10 a.m. ET Thursday has totaled $2.8 billion according to Adobe Analytics data, surpassing last year’s total spend for the same time period.
Americans so far have spent $406 million on Thanksgiving Day, an increase of 23% year-over-year. Adobe projects online sales to hit a new record of $3.5 billion. That’s well above the $2.9 billion spent on the same day in 2017.
Wednesday, the day before Thanksgiving when retailers ramp up their Black Friday sales, was also another record breaking day. Sales increased 32% over last year to $2.4 billion. Adobe says yesterday was the first day in online shopping history to have half of visits to retailer websites come from mobile.
“Pre-Thanksgiving deals appear to have enticed consumers to spend a little earlier as we saw our second $2 billion day of the holiday shopping season,” Taylor Schreiner, director of Adobe Digital Insight said in a release.
“That growth is continuing in the early morning hours of Thanksgiving Day and we expect strong growth in sales and mobile throughout the day.”
Retail sales will grow 4.8% this holiday season, according to an IBM forecast. That’s stronger than last year’s strong 4.2% growth. Appliances, clothing and jewelry will be the biggest hits this holiday season, IBM predicts.
Digital sales are already booming in November, rising 16.7% over last year, according to Adobe Analytics. Electronics, including Nintendo consoles, Amazon Fire TVs and Amazon Echo speakers, are among the top sellers so far this month. Adobe expects retailers to deeply discount computers, TVs and tablets on Black Friday to boost sales.
“We are on track for another blockbuster season for e-commerce,” said Taylor Schreiner, director of Adobe Digital Insights, in a statement.
Rough week for retail stocks
But Wall Street remains worried retailers’ plans to win the holiday shopping season will be costly. A busy day for retail earnings Tuesday sent several stores’ stocks sharply lower.
Target (TGT) announced sales and profit margins that fell short of investors’ high expectations. Despite a robust 5.1% sales gain at stores open for at least a year and 49% digital growth, Wall Street punished Target for struggling to keep down costs. Target’s spending has been rising as it races to ship more orders online and compete with Amazon.
Kohl’s (KSS) also reported a positive quarter Tuesday, but a similar story played out on Wall Street. Kohl’s has found creative ways to reformat its stores and drive traffic, but investors faulted the company for guidance that came in on the lower end of some analysts’ expectations.
One company bucking the trend was Best Buy (BBY), which said same-store sales rose 4.3% last quarter, its sixth straight quarter above 4%. Unlike other stores, profit rose too. The company raised its forecast in anticipation of consumers buying up TVs and electronics this holiday.
Some stores warned that the holidays wouldn’t be as strong as some had hoped. Discount powerhouse TJX Companies (TJX), parent of TJMaxx, Marshalls and HomeGoods, reported a 7% rise in same-store sales last quarter as consumers flooded in to find bargains. But TJX disappointed with sluggish guidance.
Other retailers have been unable to take advantage of the healthy environment. JCPenney (JCP) said last week that same-store sales fell 5.4% last quarter. Victoria’s Secret (LB) and Barnes & Noble (BKS) are under fire too. Victoria’s Secret cut its divided and same-store sales dropped 6% last quarter as the brand loses touch with many women. Barnes & Noble’s same-store sales fell 1.4% last quarter. Sales at Gap’s (GPS) flagship brand fell off 7% last quarter.
Investors are stepping up pressure on companies to take advantage of a healthy economy. Wages are rising, unemployment is low, and retail spending continues to rise. Also, longtime rivals Toys ‘R’ Us and Bon-Ton have folded and Sears filed for bankruptcy, raising the stakes for retailers to pick up market share left up for grabs.