Black Friday and the annual holiday shopping frenzy are upon us again, and that means overcrowded malls, major shortages of parking spaces and empty checking accounts.
It's a big time for the nation's retail sector, with clothes, electronics, books and everything else flying off shelves both physical and digital. All those sales are being recorded at a furious pace and, chain stores hope, making it to the bottom line. But what about the stocks of the retailers themselves -- do they actually benefit during the yearly ruckus? Of the 10 well-known major merchants chosen for the purposes of finding out, the answer in the past few years is, more often than not, yes.
The chart shows the average share price change of these retailers each year from 2006 through 2011. Of the 10, only Best Buy (BBY) and Kohl's (KSS) have, again on average, failed to show a gain. It's important to stress that these results aren't all in one direction -- every retailer in the chart had at least one year in which its share price fell during the holidays, which here is represented by the Monday before Black Friday to the last trading day before Christmas.
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Of the group, four had only a single year in which their shares didn't appreciate during the survey period. For GameStop (GME), Gap (GPS) and Abercrombie & Fitch (ANF), that was 2009. Home Depot (HD) saw its shares drop in 2007. Abercrombie is the best here overall, with an average increase of 9.7% during the holidays.
Also of note, the laggards mentioned above -- Kohl's and Best Buy -- have the most down years in total, with their shares falling in four of the six. Wal-Mart (WMT) and Target (TGT) each had three up and three down, meaning the advancing years were a good bit stronger than the years with declines.
Of the 60 holiday seasons reviewed (six per retailer) for the chart, in 37 of them, the stock rose; this equates to almost 62% of the time. In the other 23 periods, the stocks decreased. The single-best holiday period performance of the companies in the set belonged to Macy's (M), whose shares rose 34.5% during the 2008 shopping season. Coming in second was Best Buy, who that same year saw its stock surge 34.3%. However, the electronics chain, which is facing serious concerns about its future, also boasted the worst performance one year, sinking 23.4% during the 2010 holidays.
You can't make money in the past, though. Do you think retail stocks will rise this year during the holidays? Which do you believe will be the winners and losers?