By Brian Nelson, CFA
Hanging out in malls on Thanksgiving isn’t really our thing at Valuentum, but what we’re hearing thus far is that “Thanksgiving shopping was a bust.” It even felt as though tourism was down a bit as traditional near-impassable auto traffic was surprisingly absent in at least one key family destination, the gateway to the Smokies in Gatlinburg, Tennessee, and maybe keeping travelers from commuting through the city of Chicago was the potential for riots following the release of the dash cam video allegedly showing a police officer shooting a youth 16 times in November of last year. My trip from northern Illinois to Gatlinburg, Tennessee, and back was rather uneventful, not that I am complaining about having little traffic. Gas in Indiana was $1.65 a gallon; it has been a long time since I’ve seen that.
Estimates for Black Friday shoppers also reveal a continuation of a downward trend from 2012 levels which in that year saw as many as 250 million brave the stores to catch deals, according to the National Retail Federation. Reportedly, the protests in Chicago cost stores 25%-50% of sales on Black Friday. Though we’re not ready to hang our hat on any figures at this point, the early consensus is that Black Friday numbers weren’t great. Maybe times are much better now where consumers don’t need the big discounts as much, or maybe the consumer is growing more comfortable with catching the Cyber Monday deals? After all, we did hear that many websites, including Target’s (TGT), PayPal’s (PYPL), and Walmart’s (WMT) faced some glitches, likely traffic driven.
What does seem clear, however, is that electronics sales remain robust, and some are saying that Apple (AAPL) may have had the best Friday sales in its history – perhaps not saying much, but still it’s better than the opposite. Our view is that Apple will have another blockbuster holiday season (will it be enough, however?), and we’re anxiously watching Blackberry (BBRY) for incremental news regarding the traction it may be getting with the PRIV. Some noted some heavy search traffic for Fitbit (FIT), and my guess is the gadget is a perfect gift item for just about everybody this holiday season. I even have one, though it seems to be left behind at home more often than not. I hope that changes in the New Year. Mall and big box names seemed to be shunned on Cyber Monday, but recent channel checks by ChannelAdvisor suggests that Amazon (AMZN) is doing quite well.
The biggest surprise this holiday weekend probably went to the performance of Creed at the box office. The seventh installment of the Rocky franchise is turning a lot of heads, and many are saying it could turn into one of the best of 2015, with Sylvester Stallone taking home an Oscar for a supporting role. Mockingjay Part 2 from Lions Gate (LGF) and The Good Dinosaur from Disney (DIS) did better, but they also were in more theaters than the boxing film. The Thanksgiving Day box office was up 12% from last year’s mark, according to Deadline. Instead of shopping, maybe people were spending time with family at the movie theater? Considering all of the movies that came out since 1982, in their 3-day, Friday to Sunday gross over the Thanksgiving weekend, The Good Dinosaur and Creed made the top 10.
The big winner looks to be Apple, while the big losers appear to be mall-based fashion apparel and the big box department stores. When all is tallied, the read on Cyber Monday sales will likely impress as e-commerce proliferation and the ease of shopping at home continue to take Americans by storm. Having watched Creed over the weekend, I want to know will we see a Creed II, the eighth installment of the Rocky series? Something tells me yes. It was that good.