WSM

Many shoppers want their money to matter in a year when a pandemic has battered small businesses and a harsh light has been shined on racial inequities.

CFRA strategist Sam Stovall discussed the rotation into value and cyclical stocks on CNBC's "Squawk Box."

(Bloomberg) -- Pandemic-driven lockdowns, shuttered malls and stuck-at-home consumers have hurt retailers in 2020 as Covid-19 ravaged the economy. With Black Friday around the corner, equity traders are bracing for a holiday season where brick-and-mortar businesses that lack strong digital platforms could suffer.For the first time ever, more consumers intend to shop online than in stores, a Deloitte survey shows. U.S. online holiday sales will total $189 billion, shattering all previous records with a 33% boost from last year, according to Adobe Analytics. That’s equal to two years’ growth in one season.“This year is unlike anything else,” said Ken Perkins, president and founder of Retail Metrics. “People are going to be really adverse to come into stores on Black Friday, so traffic will be relatively more modest. Curbside pick will be extremely important this holiday season. Impulse buying will also fall off as online shopping tends to be very targeted.”Mall-based retailers have been among the most battered stocks of 2020 amid rapid changes in consumer behavior as lockdowns resulted in less need for some items and accelerated the shift toward e-commerce and away from physical stores.But with promising vaccine trial results coming through, signaling consumers might be ready to go back to the mall, retail stocks have been soaring. The S&P 1500 Apparel Retail Index erased its pandemic-spurred losses earlier this month, while the S&P 1500 Retailing Index hit a record high in October.Here’s a look at some potential stock winners and losers in an unprecedented holiday shopping season. Year-to-date stock performance follows each name.ElectronicsWith the release of new Xbox and PlayStation devices, gaming consoles are coveted and will be “almost impossible to get your hands on,” Perkins said. In addition, home-related electronics will be extremely popular.Electronics like personal computers, televisions, tablets and virtual-reality accessories have also been in high demand, according to a recent data analysis from NPD Group/Retail Tracking Service.Key stocks: Best Buy Co. (+29%), Rent-a Center Inc. (+26%), Aaron’s Holdings Co. (+16%), Conn’s Inc. (-6.3%) and Acco Brands Corp. (-11%).ToysPandemic spending earlier this year, won’t hold parents back from holiday shopping. They are likely to spend “the same or more” on toys this season, according to DA Davidson analyst Linda Bolton Weiser, who cited research done by Mattel Inc.‘s executives.“The pandemic did not represent a pull-forward of holiday demand,” Weiser said. Furthermore, Mattel’s core brands probably added shelf space as retailers are “filling their aisles with traditional evergreen brands like Barbie and Hot Wheels” because there are fewer toys this year that are based on entertainment properties.Key stocks: Mattel (+14%), Hasbro Inc. (-13%), Amazon.com Inc. (+69%), Walmart Inc. (+27%) and Target Corp. (+39%).Home GoodsThe boom in suburban living has resulted in strong sales at home furnishing companies. “Even with the vaccine coming, people are moving out of the city, into the burbs, and they need to fill their homes,” Perkins at Retail Metrics said.Williams-Sonoma Inc. said on a recent call that demand for its products had continued into November, while TJX Cos. executives said on its third-quarter call that HomeGoods will be “one of the healthiest divisions” moving into the new year.Key stocks: Williams-Sonoma (+54%) and TJX (+5.4%).E-commerce & FintechOnline transactions are likely to continue to surge as Covid-19 cases rise globally, and with the U.S. Centers for Disease Control and Prevention calling shopping in crowded stores during the holiday period a “higher risk” activity.Read more: Virus Spreads Out Black Friday Shopping, Puts Digital at ForeInternet retail names that target a more affluent consumer also stand to gain, KeyBanc said in its holiday outlook report. In addition, companies that have added customers during the pandemic could convert them into holiday shoppers, while others are well positioned to steal market share from struggling retailers if lockdowns continue.Key stocks: Square Inc. (+224%) and PayPal Holdings Inc. (+90%), Farfetch Ltd. (+407%), Nordstrom Inc. (-40%), Peloton Interactive Inc. (+271%), Etsy Inc. (+211%), Amazon, Walmart and Target.Lockdown HurdlesDepartment store retailers will face hurdles this holiday season, according to several Wall Street analysts. All department stores saw “steep” drops in online traffic ahead of Thanksgiving, said CFRA Research analyst Camilla Yanushevsky, while Bloomberg Intelligence analyst Poonam Goyal said early Black Friday sales and holiday shopping would give department stores “a much-needed boost.”Cleveland Research was turning cautious on the holiday outlook for department stores, while JPMorgan Chase & Co. analyst Matthew Boss recently cut fourth-quarter same-store sales estimates to below-consensus levels. Meanwhile, Marshal Cohen, NPD’s chief industry adviser for retail expects fashion and beauty categories to be “faced with the challenge of making up lost ground in hopes of a healthy finish to 2020.”Key stocks: Macy’s Inc. (-36%) and Nordstrom.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Gap reported fiscal third-quarter earnings that fell short of expectations, as higher spending on marketing offset sales gains at Old Navy and Athleta.

(Bloomberg Opinion) -- Like just about everything else in 2020, Black Friday is not going to be normal. The annual shopping bonanza, usually typified by scenes of long lines and shoulder-to-shoulder crowds hunting for discounts, will be more restrained amid the resurgent pandemic. But sparse crowds this time shouldn’t necessarily be cause for concern for retailers – especially given a late-cresting wave of optimism about how the broader holiday season will shake out. Typically, retailers want their stores teeming with shoppers over the Thanksgiving holiday weekend. This year? Not so much. To allow for social distancing, Walmart Inc., for example, has said its stores will allow 20% of their typical capacity on Black Friday, while Target Corp. will set limits on store by store. Most big chains will remain closed on Thanksgiving, a day that attracted 37.8 million in-store shoppers last year.But a quieter Black Friday shouldn’t sting too badly if retailers’ other seasonal strategies are working out according to their plans. They began pummeling shoppers with Black Friday-like discounts ahead of the usual schedule. If that worked, then it shouldn’t be too concerning if crowds are thin this weekend. Retailers have also invested in their e-commerce operations, often by launching or building awareness of curbside pickup options, to make up for some of the lost in-store sales. Perhaps the best news for retailers ahead of this unusual Black Friday is the trail of recent breadcrumbs about consumers’ willingness to spend despite a raging pandemic and gloomy economy. Several retailers have delivered gangbusters earnings reports in recent days, including Best Buy Co., which said Tuesday that its 23% increase in third-quarter comparable sales was its best result on that measure in about 25 years. That followed similar blowout results from Target Corp. and Home Depot Inc. last week.While there had been concern about how consumers would behave when their stimulus checks ran out and supplemental unemployment benefits ended, Walmart found its sales accelerated in September and October after a slower August. Home Depot executives said sales of Halloween items were strong, suggesting that, despite fewer parties, shoppers were looking to buy items to help them get in a holiday spirit. Lowe’s Cos. and Williams-Sonoma Inc. reported strong sales, a sign that the spending on nesting that was ushered in by the pandemic has continued in full force. Of course, those earnings reports are a snapshot in time for a period that for most retailers ended around Oct. 31. Since then, cases of Covid-19 have exploded, and the CDC has advised Americans not to travel for Thanksgiving. Several months ago, I thought such volatile and frightening conditions would send shoppers to the sidelines. My logic was: Why buy gifts for people you might not be able to see? Why buy new place settings for a Christmas dinner that may not happen? It turns out, that isn’t the calculus many shoppers are making, at least so far. Instead, based on consumer surveys and recent executive remarks, it appears that a sizeable group of consumers are plowing the money they would’ve spent on air travel, theater tickets and restaurant meals into skin cream, mattresses and all sorts of goods. You might say they’re engaging in retail therapy – soothing their pandemic sorrows with stuff.  On Monday, the National Retail Federation said it expects a 3.6% to 5.2% holiday season sales increase, which, especially at the upper end of the range, would constitute quite healthy growth. The trade group’s chief economist said in a press release the upbeat figure takes into account a “psychological factor” in which shoppers decide they “owe it to themselves” to splurge. The NRF’s outlook is sunnier than forecasts that came earlier in the fall, reflecting recent flashes of shopper resilience. While retailers’ holiday season prospects look better than they did a couple of months ago, investors shouldn’t overdo it. (Sending shares of Macy’s Inc. up 15% on Monday, for example, smacked of getting carried away.)  The worsening Covid-19 situation could bring new local restrictions that force a fresh round of store closings, or could cause people to voluntarily stay at home. Certain types of retailers, especially department stores, will find it harder than others to get a piece of the spending pie. And while foot traffic is vastly better than at its trough, it is nowhere near normal. These conditions could end up dealing a devastating blow to the malls and chains teetering on the edge of bankruptcy. But shoppers will be seeking some semblance of normalcy or indulgence, and retailers will benefit if they can provide it – whether in the form of a Nerf gun, a diamond necklace or a fancy Christmas roast. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Home and kitchen goods store Williams-Sonoma, Inc. (NYSE: WSM) is positioning itself to better stand out in the crowded retail space by offering different features and perks to digital and non-digital customers, CEO Laura Alber

Williams-Sonoma Stock Is Pointed Up, so What's Giving Us Pause?...WSM

Morgan Stanley maintains Williams-Sonoma (NYSE:WSM) with a Underweight and raises the price target from $75 to $95.