The holiday shopping season is the most important time of year for retailers. For many companies, retail sales leading up to Chanukah and Christmas account for as much as 40% of their annual revenue, according to data from the National Retail Federation. With such high stakes, U.S. retailers plan to offer deeper discounts and extra promotions during this year's highly anticipated Black Friday events. However, some retailers need a blowout Black Friday more than others. Below, Motley Fool contributing analysts explain why J.C. Penney (NYSE:JCP), Amazon (NASDAQ:AMZN), and Target (NYSE:TGT) can't afford to lose the season.
Rich Duprey: After reporting disappointing third-quarter sales results on Wednesday, J.C. Penney is going to need some blowout Black Friday numbers to convince analysts its turnaround remains on track. The department store chain recorded three straight quarters of rising sales as it struggled to recover from a failed attempt at reinventing itself, but it wasn't able to score a four-peat, as revenues of $1.76 billion slipped 0.5% below the year-ago figure. The sales shortfall was blamed on warm weather that kept customers from responding to its autumn apparel selection.
Macy's (NYSE:M) also came up short, as did Kohl's (NYSE:KSS), so it's not specific to issues at J.C. Penney, but considering Macy's stock jumped 5% yesterday after it reported falling same-store sales, and J.C. Penney's stock slipped 3% in after-hours trading despite saying its comps came in flat, it's clear Penney has a much bigger credibility gap to bridge than does its rival.
And it won't be an easy leap to make. Last year, J.C. Penney was lapping some pretty horrendous numbers from 2012, so the comparisons were much easier, but the 10.1% jump in comps in November last year underwhelmed Wall Street, which believed it should have done better.
Now it's going to have to build on that going into a holiday season where retailers remained worried about a lackluster showing, even though the National Retail Federation forecasts holiday sales growing between 8% and 11% in 2014 to as much as $105 billion.
Once again, they're pulling out all the stops, and J.C. Penney will be part of it, opening again on Thanksgiving Day, but doing so three hours earlier than a year ago, or 5:00 p.m. Black Friday will, of course, continue to be a big sales event for retailers, none more so than J.C. Penney, for which it will serve as a barometer of whether it's really on the road to recovery.
Joe Tenebruso: This year has been rough for Amazon.com (NASDAQ:AMZN) shareholders, with the e-commerce juggernaut's stock price falling more than 20% since the start of the year. After a decade of 30% annualized revenue growth, Amazon has seen that pace decelerate markedly in 2014. Even more concerning is that management gave fourth-quarter sales guidance in the range of $27.3 billion to $30.3 billion, representing a year-over-year increase of only 7% to 18%. The midpoint of that range was well below Wall Street expectations of $30.89 billion, and the stock took a hit on the news. Although shares have since recovered, I fear that if Amazon's sales come in at the low end of its fourth-quarter outlook, we could see further declines in its stock, and heavy losses for its shareholders.
That's why I'll be watching Black Friday sales figures closely. The period between Black Friday and Cyber Monday is typically the busiest time of the year for Amazon, as millions of shoppers scurry to find the best deals and place their orders ahead of the holiday season. It can be an early indicator of how Amazon's fourth quarter will play out, thereby making the Black Friday to Cyber Monday period the most important few days in Amazon's most important quarter of the year.
Still, as long-term, Foolish investors, we must steel ourselves with the knowledge that one quarter will not make or break an investment in Amazon. We're not traders; we're business owners. And as such, unless I see a severe and prolonged downturn in Amazon's sales trends, I plan to hold my shares of what I believe can be a multi-decade investment opportunity.
Tamara Walsh: Black Friday 2014 is Target's chance to redeem itself for what could only be described as a devastating holiday shopping season last year for the big-box store. Target's weak holiday sales in 2013 were the result of a series of slip-ups including a redesigned e-commerce site that confused consumers ahead of Black Friday and a massive security breach between Thanksgiving and Christmas that left tens of millions of Target customers vulnerable to credit card fraud. As a result, Target is under added pressure this year to trounce the Black Friday competition.
In hopes of putting these setbacks behind it, Target is offering hundreds of door-busters, free shipping and in-store pickup, as well as exclusive designer lines that shoppers will only find in Target stores. Earlier this week, Target offered early access to Black Friday deals for one day only. The bullseye chain is also planning a Black Friday pre-sale on Nov. 26 and opening their doors at 6 p.m. on Thanksgiving night.
"We know our guests are pulled in a million different directions as the holidays get under way, so we're helping them save time and money by offering more access to Black Friday deals," said Kathee Tesija, Target's chief merchandising officer. Investors are keeping their fingers crossed that these tactics will result in a blowout Black Friday for Target; if not, we could see the stock nosedive.
Joe Tenebruso has no position in any stocks mentioned. Rich Duprey owns shares of J.C. Penney Company. Tamara Rutter owns shares of Amazon.com and Target. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.