'Black Friday' Turning Into 'Couch Friday' - Cowen (WMT) (PINK) (AEO) (TGT) (more...)

Cowen retail analyst Oliver Chen weighed in on what he is seeing so far this Black Friday. Chen said Black Friday this year is in large part a Couch Friday, as the big event is not just about physical stores.

Chen weighed in: "Best traffic & assortment at WMT, PINK & AEO, most cautious at Old Navy & Gap. Promos heavier given doorbusters (TGT/WMT) & %-off promos (GPS, COH, KATE, URBN, ANF). Cowen estimates store traffic of -3-4% offset by +20% online traffic with majority being mobile. Big items: toys, athlesiure bottoms, beauty, electronics, denim...

...we're most cautious on weaker trends in seasonal apparel, pricing pressure in women's tops, and work-in-progress fashion assortment at Banana Republic, Gap, and Anthropologie. Most improved: Hollister, and most clean-fast-friendly-and robust inventory management at WMT. The toy assortment looked best at TGT given proprietary offerings. We acknowledge the traffic compare is easy given 2015 Black Friday traffic -14%. Nonetheless, we still expect negative traffic given earlier start this year of the Holiday selling season and rise of mobile, which could be as much as 60% or more of all traffic, and consumer exhaustion from a saturated promotional environment. We believe beauty is a standout category, sport and active apparel for men and women also strong; we continue to have caution on the handbag sector as consumers prefer more newness. Based on our survey of teenagers (See Fig. 3), fast fashion apparel retailers (H&M, Primark) remain very popular, as well as electronics - apparel remains a mainstay but teenagers are preferring discounts. Select retailers did some store-only promotions, including Lord & Taylor and Bloomingdales. We expect negative store traffic to be more than offset by higher conversion rates, online growth rates, and higher check sizes to drive overall Holiday revenue growth in the +2-3% range."

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