Prelude to the Holiday Season

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Much as shoppers gather their lists and funds together, stores are gearing up for the upcoming holiday season. The season begins with Black Friday, a day that, while filled with wild antics, has seen stores produce some of their best sales. Stores competitively fight to lure customers. To be prepared to win, they need a pre-game plan to strategize.

September proved to be an interesting month for the retail industry. J.C. Penney (NYSE: JCP) is in the midst of a bad run in the market. Sales are down and investors have lost interest, but CEO Ron Johnson is attempting to restore faith in his company with his turnaround plan. The plan is to create a shop within a shop. J.C. Penney's currently has 100 shops within its company, and by collaborating with different designers, J.C. Penney's exposes the designers to a wider audience and expands its company’s appeal. Johnson has many critics, but with strong holiday sales he could look to prove them wrong. His plan might just be crazy enough to work.

Shares of Target (NYSE: TGT) have fallen in the midst of outside drama involving the company. The company has had to recall its company-branded Peanut Butter after reports of Salmonella. Target is also being sued by Minnetonka, a moccasin designer, for supposedly copying its Thunderbird design. Minnetonka was offered the opportunity to sell its moccasins in Target, but they turned down the offer. While these negative factors are reflected in Target’s rocky share prices over the last month, the company has made moves that look to propel it to success this holiday season.

The company expanded its store locations to Canada, and will be a strong competitor to Wal-Mart and Sears. Additionally, throughout all their locations they will be hiring eighty thousand to ninety thousand holiday workers. Customers will have less discounted prices this year, but Target seeks to make up for that by teaming with Neiman Marcus. In each of its respective stores, it will have a joint holiday collection. If Target can overcome outside hurdles, it can have a great holiday season and finish the year out strong.

Another company with a spotty record in September is Gap (NYSE: GPS). The holiday season is going to make it or break it for this company, and it’s riding on the appeal of corduroy’s to bring customers in this year (a trend that has not caught on yet). The Banana Republic brand is also introducing a new collection for men and women, inspired by the novel and upcoming film Anna Karenina. It could boost sales significantly, especially after the Nov. 9 film release. Also moving in the right direction is another Gap brand: Piperlime. The online retailer has now opened its first shop in New York; this will help to expand its customer base. Gap can rebound if the cards it has dealt work in its favor.

Surging ahead of all competitors are Macy’s (NYSE: M) and Nordstrom’s (NYSE: JWN). Both companies have made the right moves at the right time. Macy’s is heading into October with a renewed energy. It’s looking to hire eighty thousand seasonal workers, a 2.6% increase from last year, in addition to having sales rise 3.7% from the first half of the year.

Macy’s and Finish Line have announced that they have a new partnership, which is why 450 Finish Line stores will be opened in Macy’s nationwide. Nordstrom’s is also expanding its stores and brand. The company is opening four stores in Canada and opened sixteen new United States stores. Its Rack stores are very popular and account for 20% of its sales. To continue to increase sales over the “next five years,” Nordstrom’s will “invest $1 billion into e-commerce.”

The top spot for the holiday season will come down to either Macy's or Nordstrom's. However, with the market's unpredictability, any of these five companies could win the holiday battle.

justpoetic has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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