Deep discounts are driving a strong start to holiday online spending, according to new data from Adobe Analytics. Facing sticky inflation and economic uncertainty, consumers are belt-tightening, which is good news for Club names that help shoppers score bargains. Online shoppers spent $63.2 billion in the first 20 days of November — up 5% year-over-year and beating Adobe’s full-season forecast of 4.8% growth. Throughout November online consumer spending also notched a new record, with 17 days of the month raking in $3 billion in single-day sales, compared to 13 days in 2022. Adobe estimates total spending for the holiday season — for the months of November and December — to notch $221.8 billion. Online sales were $210 billion last year and $205 billion in 2021. While online sales this year look healthy, there have also been other less optimistic overall holiday spending forecasts — including from a number of retailers that reported earnings this week as well as recent research notes from Morgan Stanley and Bank of America , which we analyzed in earlier commentaries. Still, Adobe highlights a favorable setup for Club holdings such as off-price destination TJX Companies and e-commerce giant Amazon (AMZN). While measuring online holiday spending, the report’s emphasis on bargain-driven sales signals that shoppers at brick-and-mortar locations would feel the same way. So far in November Online sales for apparel were up 22% this month compared to daily average sales in October, according to Adobe data. Apparel was discounted on average at 21% from listed online prices. TJX YTD mountain TJX Companies (TJX) year-to-date performance Steeper discounts and growing apparel numbers bode well for TJX, which owns T.J. Maxx, Marshalls, and HomeGoods. TJX’s chains have the ideal businesses for a belt-tightening consumer with cheaper products than their full-price peers. During last week’s earnings call, TJX management acknowledged that online remains a small part of their business. But they said they were pleased with efforts to increase e-commerce: “We’re well-positioned to flow fresh assortments to our stores and online this holiday season.” Alongside the release of strong fiscal 2024 third-quarter results, TJX boosted sales guidance for its full fiscal year ending Feb. 3. With a solid quarter and rosier outlook in place, we upgraded TJX stock to our buy-equivalent 1 rating . We viewed the stock’s more than 3% drop on earnings day as an opportunity. Since then, TJX has made back that dip and then some. Cyber Week outlook Adobe forecasts a consumer spending increase of 5.4% to $37.2 billion during Cyber Week — known as the five days from Thanksgiving to Cyber Monday. That level of sales would account for 16.8% of the entire holiday season. On Black Friday, the big shopping day after Thanksgiving, online spending alone is seen rising 5.7% to $9.6 billion. AMZN YTD mountain Amazon (AMZN) year-to-date performance This is a positive sign for our e-commerce name Amazon — the go-to for many consumers during the year and the holiday season due to its quick delivery, expansive product selection, and plethora of deals. If the company’s fall sales event, Prime Big Deals Days, is any indication, Amazon is poised to make a real killing during Cyber Week. In September, Amazon announced plans to hire 250,000 workers in preparation for the holiday season, an increase of 100,000 from last year. According to Goldman Sachs, Amazon’s “incremental hiring could be a positive read” on the company’s internal holiday demand forecast. Amazon stands to benefit from ongoing efforts to regionalize its fulfillment network. Not only is stocking items closer to their final destination helping with cost — but the faster delivery times, as a result, are boosting demand. CEO Andy Jassy explained on last month’s post-earnings call , “When you deliver faster delivery to customers they actually start to consider you for a lot more items than they otherwise would.” He added, “When you’re consistently getting something same-day or next-day it just changes what you’re willing to do.” In addition to continued improvement in profitability from its e-commerce operations into the holiday shopping season, we’re also optimistic about growth prospects for Amazon Web Services (AWS), its cloud business. On the call, Jassy put to rest initial concerns about AWS revenue growth in Q3, saying several large deals were signed during the quarter that show up on the book until Q4. (Jim Cramer’s Charitable Trust is long TJX, AMZN. See here for a full list of the stocks.) 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Deep discounts are driving a strong start to holiday online spending, according to new data from Adobe Analytics. Facing sticky inflation and economic uncertainty, consumers are belt-tightening, which is good news for Club names that help shoppers score bargains.
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