Reuters: Retail Stocks, Black Friday Gains

November 24, 2023

Consumer spending spree

Running Point and its chief investment officer, Michael Ashley Schulman, CFA were quoted by Reuters — in an article by Bansari Mayur Kamdar and Suzanne McGee, “US retail ETFs deliver solid Black Friday gains” — regarding retail stocks and ETFs moving higher on Black Friday.

The article was also picked up by Yahoo Finance, Street Insider, MSN, NASDAQ, The Globe and Mail (Canada), The Business Times (UK), iNews (Cayman Islands), Forsyth Barr (New Zealand), Zonebourse (France), Republic World (India), and (Vietnam), amongst others.

Consumer spend will rise, particularly now that strikes have ended

Black Friday sales should be a complete blow-out — with consumer spending surpassing pre-pandemic figures — especially with this year’s extra shopping weekend of December 23 and 24 before Christmas.

Investors in retail sector ETFs have recently been alarmed as Walmart, Kohl’s, Best Buy, and many other retailers caution about weak or uneven consumer demand leading into the holiday shopping season, potentially resulting in a broad drop in discretionary spending. Brands are proceeding cautiously as consumers balance their spending between products and services; but investors are being overly wary.

The end of the United Auto Workers and Hollywood SAG-AFTRA strikes should contribute to an uplift in expected holiday sales.

This ties in with what we reported to the media back in October — “Consumer spending should remain resilient especially through the holiday season because unemployment levels remain low and wages continue to grow,” — when asked about Visa’s projected earnings.

“Visa profit beats estimates on post-pandemic travel boost,” Reuters, October 24, 2023 

Holiday sales will hit record highs

Despite economic uncertainty, consumers are expected to spend an average of $1,530 to $1,652 this holiday season — a 12% to 14% increase over 2021 — finally surpassing pre-pandemic spending levels according to PWC’s and Deloitte’s 2023 retail forecasts respectively. With Thanksgiving and Black Friday here, this positive outlook is a welcome sign for retailers gearing up for the critical fourth quarter sales period. However, lingering anxiety remains around connecting with inflation-squeezed shoppers in a turbulent environment.

Retail brands feel the pressure to get their messaging right

Brands feel added pressure to flawlessly execute this holiday season amid broad economic concerns. A key priority will be striking the right tone between optimistic messaging and price-conscious affordability. Some companies are betting big on digital experiences and emerging platforms to woo young, digital-savvy audiences. Simultaneously, shifts in consumer preferences, like renewed appetite for in-store shopping will drive simplicity and back-to-basic offerings. Finding the optimal mix of innovation and nostalgia while keeping prices competitive may determine 2023’s retail winners.

Excess leftover inventory will be unforgiveable

Store discounts and promotions are always expected, it is a holiday tradition! This season, we will see retailers playing actively on promotional levers to drive sales before year-end so that they are not stuck with excessive inventory that they need to clear out in the first quarter of 2024. Investors and Wall Street analysts might pardon slightly weaker than expected holiday sales amongst individual retailers, but they won’t forgive excess leftover inventory that eats into the balance sheet and erodes margins in a late-season clearance dump.

Multifaceted shopping, in-person, online, and using AI

Bargain-hungry consumers will kick off this holiday shopping season browsing physical stores to scope out deals while refining choices with digital tools — search engines, e-commerce sites, brand dotcoms, generative AI, and social platforms — to compare options and garner AI-enabled recommendations that enhance the self-guided research process. Final purchases will occur both in-person and online.

Article quotes are below:

“I believe that some [retail] forecasts have been distorted by the recently ended United Auto Workers and Hollywood SAG-AFTRA actor strikes, which caused a pullback in spending amongst various large pockets across the country,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

ETF investors “have been alarmed by retailers warning of cautionary, weak, or uneven consumer demand,” Schulman added.

In French: “Je pense que certaines prévisions ont été faussées par les grèves des travailleurs de l’automobile (United Auto Workers) et des acteurs d’Hollywood (SAG-AFTRA), qui ont provoqué un recul des dépenses dans diverses grandes poches à travers le pays”, a déclaré Michael Ashley Schulman, directeur des investissements chez Running Point Capital.

Les investisseurs des ETF “ont été alarmés par les détaillants qui annoncent une demande prudente, faible ou inégale de la part des consommateurs”, a ajouté M. Schulman.

In Turkish: Running Point Capital‘in baş yatırım yetkilisi Michael Ashley Schulman, bazı tahminlerin, ülke genelinde birçok büyük sektörde harcamaların azalmasına yol açan son Birleşik Otomobil İşçileri ve Hollywood SAG-AFTRA aktör grevleri nedeniyle çarpıtılmış olabileceğini öne sürüyor.

Schulman, ETF yatırımcılarının “perakendecilerin ihtiyatlı, zayıf veya dengesiz tüketici talebi konusunda uyarıda bulunmasıyla alarma geçtiğini” de sözlerine ekledi.

Black Friday Shopping
Black Friday Shopping — Graphics and AI imagery by

We’re buying and selling your history
How we go about it is no mystery
We check it with the city then change the law
Are you looking forward?
Now you want some more

We’re S-H-O-P-P-I-N-G
We’re shopping

Lyrics from “Shopping,” by Pet Shop Boys

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