A Very Important Shopping Season

It’s not even October yet, and companies are already talking about holiday shopping. Hell, Halloween candy has been on the shelves of my local store for about two months now. And Black Friday sales preclude Thanksgiving, as every company competes for your hard-earned dollars.

Now we all know it’s been a tough year for retail, which makes this holiday shopping season all that more important. 🛍️

First, let’s talk about how companies are preparing in the current market environment. Then we’ll talk about what analysts are watching for.

Today, Walmart said it plans to hire 40,000 workers for the holiday season. Some will be part-time store associates and customer service workers. Others will be permanent truck drivers. While 40,000 may seem like a lot, this is down from the 150,000 the company hired last season.

Meanwhile, Target said it plans to hire 100,000 seasonal workers for the holidays and begin its sales promotions earlier than in past years. Markdowns will begin October 6th., which means this year’s holiday season will be the entire fourth quarter. Unlike Walmart, the company is hiring the same amount of seasonal workers this year as it did last.

These two companies have been in the news more times than they’d probably like, and their stocks have been put through the grinder. 😬

So this holiday season, analysts will look at things through two lenses.

The first lens is a “macro” one, where analysts will use these companies’ results to gauge the health of the U.S. economy. Consumer spending is two-thirds of the U.S. economy, so they’ll be watching to see IF and HOW people are spending. With Jerome Powell and the Fed waging a war on demand and the global economy struggling, this year’s likely to be a tough one.

The second lens is a “company-specific” one, where analysts will look to see how well these retailers can operate. Can they manage their costs appropriately? Do they have the right product mix in their inventory? Can they capture or maintain market share in a weak economic environment? And ultimately, how does this all translate into their results?

We’ll have to see how things shake out in the coming quarter.

On the bright side, whether these companies deliver or not, there will be sales. Either they’ll sell their excess inventory on the cheap, or their stocks will be in the clearance bin. 😂

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