By Deborah Mary Sophia and Aishwarya Venugopal
(Reuters) -Retailers like Amazon.com (NASDAQ:) and Foot Locker (NYSE:) are signaling optimism for holiday season sales after stronger-than-expected figures during Black Friday and Cyber Monday, as heavy discounts lured budget-strained customers on the peak U.S. shopping days.
Early estimates on holiday shopping have been encouraging to some investors after retailers sounded cautious notes in the lead-up to the season. Online sales in the U.S. during the five-day period from Thanksgiving through Cyber Monday hit a record $38 billion, according to Adobe (NASDAQ:) Analytics, while the National Retail Federation said more than 200 million people shopped both in-store and online during the holiday weekend, surpassing estimates.
“While there are parts of the consumer that definitely are much slower and weaker, from a spending perspective, there’s still a lot of money sitting on the sidelines… (The holiday season) actually could be a little bit better than what most people think,” said Jimmy Lee, CEO of Wealth Consulting Group, which holds Amazon shares.
Earlier this week, Ulta Beauty (NASDAQ:) and Foot Locker bumped up their annual sales expectations, with the footwear retailer flagging a strong start to holiday selling on the back of steep discounts.
Black Friday store visits to recreational and sporting goods retailers were up 322.9% compared to the 2023 year-to-date daily average, while the category saw an increase of 305.2% the previous year, according to foot traffic data from Placer.ai.
“We know we’re buying for wallet share with a value-conscious consumer this holiday season. Quarter-to-date, we’ve been pleased with the trends as consumers respond to our full-price holiday assortments in addition to our compelling deals,” Foot Locker CEO Mary Dillon said in a conference call on Wednesday.
Amazon’s extended Black Friday and Cyber Monday holiday shopping event – which kicked off on Nov. 17 and continued through Nov. 27 – was its biggest ever compared to the same ending on Cyber Monday in previous years.
This year, during the week ending Nov. 25, card spending was 1.7% higher than in the week ending the day after Black Friday last year, according to a report from BofA Global research. The corresponding increases in spending on holiday items were also larger this year, the report said.
Deep discounts have been a key feature heading into this year’s holiday shopping season and holiday discounts could get even bigger in December, according to some retail executives.
Kohl’s (NYSE:) CEO Tom Kingsbury said last week the company was “coming out on holiday very aggressively in terms of promotions.”
Most retailers including Walmart (NYSE:), and clothing chains Abercrombie & Fitch and American Eagle Outfitters (NYSE:), have raised annual forecasts, putting them on track for a strong holiday quarter.
Since Aug. 1, the consumer discretionary sector has recorded the highest percentage increase in earnings, according to LSEG IBES data.
Yet some retailers, including Kohl’s, Best Buy (NYSE:) and Lowe’s (NYSE:) Cos, have tempered their sales forecasts for the year.
“The U.S. consumer is bifurcated. Lower income households are pulling back on discretionary purchases… But outside of the lowest tier we believe household consumption remains resilient,” Jason Benowitz, senior portfolio manager at CI Roosevelt, said.
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