Black Friday Cloak And Dagger
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Just 35 days until Black Friday as of this writing. The latest news is that Target (NYSE: TGT) will price match certain online sites (i.e. Amazon.com, Bestbuy.com, Toysrus.com) after announcing in mid-September that it was going to sit out the hoopla. And the company has further announced that hot toys can be scanned with QR codes on smart phones so the little ones will be surprised for the holidays. It also looks like Macy’s will open at midnight after a Black Friday coupon was leaked.
All this cloak and dagger is worthy of a Tom Clancy novel. Personally, I’d rather be in an underground bunker (like the one the aforementioned author built himself) than shopping on Black Friday. If you intend to man the barricades, here is a link to camping out tips. It’s also good for waiting in Apple iPhone lines.
Seriously, the big retailers are playing chicken with their Black Friday ads to see who can hold out the longest and get wind of competitor’s deals. But there comes a point when the news has to come out to give avid shoppers time to plan their mission strategy.
We all know it’s going to be a mess out there, but you can still be at home on Black Friday and trade the market instead, if you like. I’ve said it before and I’ll say it again: Amazon (NASDAQ: AMZN) and Wal-Mart (NYSE: WMT) will be the big winners, with a tie for third between eBay (NASDAQ: EBAY) and Target. I know of several people that shop Black Friday and turn it around on eBay. In fact, one person calls their business, unofficially, eBay Saturday.
Amazon is supposed to have its own Black Friday deals. I don’t think the Best Buy and Target strategy to stop customers from using them as showrooms for Amazon will work that well. The plan is to make customers go to the physical customer service desks to get the price matching. And note that it’s price matching, not price bettering. Still, that won’t deter shoppers for whom storming the stores on Black Friday is more traditional than loosening the belt after turkey dinner. Wal-Mart is the winner with those shoppers.
Wal-Mart wants to elbow out Amazon, but their customer bases are so different that it’s hard to understand the point of their retail war. Wal-Mart is the solid, stolid name with a yield of 2.10% and a reasonable P/E of 16.24, while Amazon remains the high-growth choice (P/E 301 and forward P/E lower at 103.99), but both can peacefully co-exist in your portfolio. Target has its points, too, but Wal-Mart and Target are much too much alike for a diversified portfolio. The same goes for eBay (P/E of 16.95) and Amazon, even as their businesses have diverged, with eBay’s PayPal taking off and Amazon going into electronic devices and the cloud.
Ebay just reported Q3 earnings on Oct. 17 and announced PayPal was the main contributor to the 22% increase in net income, but guided holiday earnings pretty much in line with analyst expectations. CEO John Donahoe said the company's main emphasis is streamlining PayPal for use with mobile technology. He also cited changes to the eBay auction site, with Pinterest-like photos and story boards, as well as competing with Amazon and Wal-Mart for same-day delivery with some auction site items.
Close competitor Amazon reports on Oct. 25. It’s off almost 7% from its high. The company is really gearing up for the holidays, hiring over 50,000 workers.
Target has a higher yield than Wal-Mart (2.30%) and a lower P/E of 14.45, but Target's waffling over Black Friday should have shareholders concerned. With only five weeks to go everything should be in place already. Target and Wal-Mart both report on Nov. 15. By then there will be more clues as to who the Black Friday victors will be. Until then, it seems things are under wraps.
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