This Friday is Black Friday. Or ... is it?
This year, and for the past few years, Black "Friday" doesn't really start on Friday. As you've no doubt heard, retailers around the country have begun pushing up the start time for their holiday sales kickoff. At last count, Walmart (NYSE:WMT) and Sears (NASDAQOTH:SHLDQ), K-Mart and Toys 'R' Us, to name just a few, have all promised to open store doors and slash store prices as early as Thanksgiving Day itself -- Thursday.
The practice has gotten so widespread, it's even spawned a reactionary movement on Facebook: the BoycottBlackThursday page. This community page argues that if opening stores on Thursday is a convenience to shoppers, it's a downright tragedy for workers, who must sacrifice their own holidays with family, to man the checkout counters for folks who are allowed to enjoy the holiday -- but choose not to. Since these store workers are generally paid hourly, and often not unionized, they're not in a great position to argue with their bosses to get the day off.
As BoycottBlackThursday sees it, they shouldn't have to argue in the first place.
At last count, some 92,000 Facebook members have signed on in support of the page, which encourages shoppers to "boycott any retailer that chooses to extend massive Black Friday sales into Thanksgiving Day," to "protect the employees, [and] protect the family." (Interestingly, among those who've "liked" the page are the corporate Facebook pages for retailers such as Lowe's (NYSE:LOW), Costco (NASDAQ:COST), and JW Nordstrom -- all of which have bucked the tide and declared they will not be open on Thanksgiving Day.)
Online retailers such as Amazon.com, meanwhile, appear to be getting the best of both worlds. On the one hand, they've already begun a pre-Black Friday online sales push (Amazon calls its initiative "Countdown to Black Friday"). Yet with most of their work being done by computer -- and robots! -- they don't attract the same kind of opprobrium as do their bricks and mortar counterparts, who have to call salespeople into the stores.
So far, so well-known. Black Friday is not really a "Friday" anymore. But did you know it's also not even "black?"
Traditionally, shoppers have been told that the day after Thanksgiving is the day when huge crowds of shoppers swarm into American stores, boosting sales and pushing the low-margin business of retail from red into "black." Supposedly, all year long retailers operate at a loss, selling a few knickknacks here and there -- but not enough to offset the cost of keeping the stores open and the lights on, year-round. Black Friday's significance, therefore, is that by bringing so much extra business through the door, the day pushes retailers past the tipping point, and earns them their first net profits of the year.
That almost makes shopping sound like a patriotic duty. Report to the store bright and early Friday (or Thursday?), or America's retail industry will die ...
Except for the fact that it's not true at all.
Not Friday and not black either
Fact is, if you take a look at the financial statements for many of America's biggest retailers, you'll find that most of them been operating "in the black" for quite some time. Take Kohl's (NYSE:KSS) for example. Kohl's plans to open its doors at 6 p.m. Thanksgiving Day, in an attempt to goose holiday sales and keep up with discount sellers like Walmart, which is also opening early. But Kohl's needn't worry that it won't make it "into the black" this year, with or without a good Q4.
Sure, Kohl's earned $334 million in the holiday fourth quarter last year -- its most robust profits quarter of the year. But according to S&P Capital IQ data, Kohl's has chugged right along in 2014, earning a not insubstantial $121 million in profits in the first quarter, followed by $232 million in Q2, and $141 million more in Q3. Barring some sales disaster, Kohl's is all but guaranteed to end this year "in the black," regardless of whether it starts its holiday sales season on Friday midnight, or six hours earlier on Thursday.
Granted, there are exceptions. Sears, for example, is deeply in the red this year. Then again, Sears booked $358 million in losses in last year's holiday Q4, lost $489 million in Q4 2012, and $2.4 billion in Q4 2011. Chances are, Sears could have started its Black Friday sales last Friday -- and it still wouldn't save 'em.
Sears notwithstanding, though, the "Black" part of the Black Friday mythos is largely a work of fiction. Walmart is not exactly hurting for cash. It's racked up $11.4 billion in profits already this year. And the same story gets repeated over and over in this supposedly up-until-Black Friday-unprofitable retail industry -- at Big Lots and Macy's (both soundly profitable, both opening early), and at Costco and Lowe's (profits yes, early openings -- no) as well.
Long story short, there's no compelling reason for these retailers to be opening early. "Black Friday" isn't particularly black after all -- and there's no earthly reason these retailers need to start it before Friday.