Navigating Black Friday

How do Retail Stocks perform against the market over Black Friday?

Research from XTB’s team of market analysts highlights the importance of Black Friday in the performance of some of the world's most famous retail brands and their stock market performance. In data compiled over the last twenty years, XTB research shows that famous brands such as Abercrombie & Fitch, Macys and Nordstrom vastly outperform the stock market in both the run up to and period after the famous Black Friday sales. 

In the 16 days before Black Friday, research shows Abercrombie & Fitch emerged as one of the top-performing retail stocks, boasting a return of 7.66%. This is closely followed by Macy's, exhibiting a return of 4.99%, and Nordstrom, with a return of 4.37% with all three retail stocks vastly outperforming the S&P 500 over the same period which rose on average just 0.7%.

Interestingly when comparing the performance of the same retail stocks over both the 16 days prior to Black Friday and the 15 days after the famous sales day combined, the aforementioned gains noted above were retained. 

When is Black Friday 2023?

Black Friday in 2023 falls on Friday, 24 November.

What are the top 10 retail performing stocks?

The top 10 performing retail stocks in the 16 days running up to and 15 days after Black Friday for the last twenty years are as follows: 

• Abercrombie & Fitch 7.66%
• Macy’s 4.99%
• Nordstrom 4.37%
• Tapestry 4.26%
• American Eagle Outfitters 4.19%
• PVH Corp 3.73%
• Capri Holdings 3.11%
• Ralph Lauren 3.03%
• Kohl’s 2.62%
• Ross Stores 2.62% 
• SP500 0.72%

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

Why might these retail stocks be popular around Black Friday? 

As evident from the research conducted above, individuals eagerly anticipate Black Friday deals to purchase Christmas gifts and essential items but it seems that anticipation is not restricted merely to retail goods but the financial markets as well. The research noted above shows that the shares of famous retail brands are in high demand with investors buying shares in Abercrombie & Fitch, Macy’s and Nordstrom in expectation of a strong performance over Black Friday. That's why the data shows much of their average stock market performance gains happen in the 16 days prior to Black Friday, as opposed to after. So investors are likely buying shares expecting a profitable sales period over Black Friday. 

Interestingly, most retail brands hold onto their pre Black Friday stock market gains after the sales day has happened, indicating that investor moves are not temporary in nature and the gains may - whilst rising most before Black Friday - are not merely based on adrenaline. 

How can I learn to invest in Black Friday?

If you are new to the investing world and aspire to capitalise on the Black Friday extravaganza, you'll need to set up an online brokerage account. At XTB you can invest in stocks & ETFs with 0% commision for monthly turnover equivalent up to 100,000 EUR (then comm. 0.2%, min. 10 GBP). 

At XTB we request clients to fill out an online application form either through the website or the mobile app.

Within this application process, clients will need to undertake a relevant assessment, consisting of 4 multiple choice questions. This step is essential to ensure their compatibility with the product.

Upon successful completion of the application, clients will be prompted to submit Know Your Customer (KYC) documents, such as identification and proof of address, in order for us to authenticate their identity. Once the KYC process is finalised, their trading account will be established.

With the trading account active, clients will gain unrestricted access to both the trading platform and the client office. This provides them with the opportunity to acquaint themselves with the software and, if desired, make an initial deposit to commence their trading activities.

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Please note that traders should check whether the brokerage is regulated by a reputable financial authority. In the UK, it should be regulated by the Financial Conduct Authority (FCA). 

XTB is regulated by the FCA and offers a diverse range of over 5400+ instruments including Forex Pairs, Commodities Global Indices, Stocks & Shares and ETFs with 0% commission (for monthly turnover equivalent up to 100,000 EUR (then comm. 0.2%, min. 10 GBP)) catering to traders with an array of preferences. 

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

The above chart illustrates the average return on investment (ROI) for the top 25 retail companies over the past 20 years. It is apparent that the retail sector boasts an average return of approximately 2.54%, while the S&P trails lightly behind with an average return of 1.61%.

Tips on Black Friday shopping 

Here are a few tips which can make your shopping experience a bit more enjoyable. 

Before Black Friday, it’s always beneficial to take some time to research the deals that will be available. This will help you to know what you are looking for and to avoid impulse purchases. Establishing a budget is crucial to prevent overspending in the excitement of Black Friday. It is very important to determine how much you can afford to spend and allocate specific amounts to different categories, ensuring a disciplined and controlled shopping experience.

By subscribing to newsletters and alerts from your favourite retailers you often get early access to Black Friday deals and exclusive promotions, giving you a head start on the best discounts. Before committing to a purchase, make sure to compare prices across multiple retailers. Additionally, read product reviews to ensure that the items you're eyeing meet your expectations in terms of quality and functionality. While scoring a great deal is exhilarating, it's essential to be aware of the return policies. Check the terms and conditions for returns and exchanges, as some Black Friday deals may come with specific conditions.

Conclusion 

In conclusion, Black Friday remains a highly anticipated and exciting shopping event, marking the unofficial start of the holiday shopping season. As consumers eagerly seek out the best deals and discounts, retailers strategically unveil attractive offers to captivate crowds both online and in-store. While the excitement and chaos of Black Friday can be overwhelming, it presents a unique opportunity for shoppers to snatch significant savings on a wide array of products. 

As we navigate the evolving landscape of retail, it's clear that Black Friday will continue to play a crucial role in shaping consumer behaviours and setting the tone for a festive and joyous holiday season. Whether you're braving the crowds, opting for the convenience of online shopping, or investing, the spirit of Black Friday is undeniably alive, promising exciting deals and the thrill of finding the perfect gift at a fraction of the cost.