By Logan Moore
Macy's CEO Jeff Gennette stood in the middle of the department store in New York's Herald Square on the morning of Black Friday, talking about how the crowds are back at bricks-and-mortar stores.
"We're not going to disappoint customers," he told CNBC, noting that the retailer's inventory is about 20% higher than last year because it avoided supply-chain snafus by ordering merchandise early and using different ports.
Fears over a heavily mutated variant of Covid-19 sent the S&P 500 index 2.3% lower on Friday, with retail stocks sliding 2.4%. Consumers didn't pay much attention, continuing their return to physical stores, a trend that Barron's highlighted in a recent cover story.
According to early data by Mastercard SpendingPulse, Black Friday in-store sales were up nearly 43% compared with the same time a year ago. Online sales were up 10.6%.
Earlier this past week, electronics retailer Best Buy (ticker: BBY) said its online sales declined in its recent quarter, while Dick's Sporting Goods (DKS) reported flat online sales in the same period. Both reported higher overall sales.
A lack of door-buster discounts might be one thing that trips up shoppers. "This might be the first holiday season where consumers won't win the game of 'discount chicken,' " says Rob Garf, vice president of retail at Salesforce, describing shoppers' tendency to wait until the last possible moment to get the best deals.
Overall holiday sales are expected to increase at a record pace. The National Retail Federation projects total spending will be up as much as 10.5%, to $859 billion, from a year ago.
As Black Friday ushered in the holiday shopping season, retailers turned in a mixed bag for the recent earnings season. Macy's beat Wall Street expectations and raised its guidance on fiscal-year sales to between $24.12 billion and $24.28 billion, up from $23.55 billion to $23.95 billion. The stock (M) was down 12% for the week but is up 171% this year.
Other retailers weren't as successful at navigating supply-chain disruptions. Gap (GPS) said it suffered from "acute supply-chain headwinds" while Nordstrom (JWN) said it had a shortage of merchandise at its Nordstrom Rack off-price chain. Gap stock slumped 28% for the week; Nordstrom tumbled 31.5%, the worst week for the stock since 2008.
Walmart (WMT), which declined 1.8% for the week, and Target (TGT), off 1.6%, have plenty of inventory to stock shelves but face questions from investors on whether inflation and labor costs will hurt the bottom line.
Overall online sales remain strong. U.S. consumers spent $6.9 billion online on Thanksgiving Day, up 1% year over year, according to estimates by Salesforce. The cloud-based software company projected U.S. online sales of $12.9 billion for Black Friday, the same level as last year.
The retail federation estimated that a total of 58.1 million people would shop on Saturday, and 62.8 million on what has become known as Cyber Monday.
Even after Friday's decline, the SPDR S&P Retail exchange-traded fund (XRT), is up 51.1% this year and is on pace for its best year since 2009, when it rose 74.8%.
Despite some hiccups, robust overall sales point to happy holidays for most retailers.