5 retailers that need a great 2024 holiday season

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Retail is entering the final weeks of the year and one thing is clear: It’s crunch time. 

While every year the holiday season can determine a retailer’s health, some companies need a strong finish to 2024. “Value” has become a touchstone word as many shoppers have seen discretionary funds tighten and retailers race to prove that consumers’ dollars are well spent at their stores. 

Some companies are more vulnerable to the highs and lows of the season than others. In particular, retailers that are more exposed during Q4 could face additional pressure on credit quality, according to S&P Global Ratings. Last year, Victoria’s Secret & Co, Signet Jewelers and Macy’s generated 65% or more of their annual operating income from holiday sales, per the report.

Those retailers that are exposed to discretionary spending are nearly 1.5 times as likely to face a downgrade within two years than those whose sales rely on nondiscretionary spending, according to S&P Global analysts led by Lauren Slade.

U.S. Retail Exposure to Holiday Sales in 2023
Company Q4 Share of Total Reported Operating Profit
Victoria’s Secret &. Co. 90%
Signet Jewelers 66%
Macy’s Inc. 65%
Burlington Stores 57%
Estee Lauder Cos. 57%
Bath & Body Works 54%
Ralph Lauren 54%
Abercrombie & Fitch Co. 46%
Nordstrom 44%
Best Buy 42%
Dollar Tree 42%
Kohl’s 42%
Carter’s 41%

SOURCE: S&P Global Ratings

But the Thanksgiving Day through Cyber Monday time period has set a positive tone overall, with 197 million shoppers making purchases during those five days, according to the National Retail Federation and Prosper Insights & Analytics. It’s the second highest number in the survey’s history after last year’s record of 200.4 million. Cyber Monday in particular hit it out of the park, with spending reaching over $13 billion for the day.

The long weekend “exceeded expectations in terms of the sheer volume of shoppers,” NRF CEO Matthew Shay said in a statement.

Not every company on this list is struggling financially — some have had one tough quarter, recently changed leadership or have been dealing with the fallout of changing consumer shopping patterns. 

But, as the season races to a finish, here are five retailers that could really use a win:

1. Target

Target remains a powerhouse retailer. Yet, the company’s most recent earnings missed expectations and it lowered guidance, ultimately causing stock to fall 22% on the day of its Q3 announcement. Sales for the quarter were down nearly 1% year over year to $25.2 billion, net earnings tumbled 12.1% to $854 million and comparable sales were flat. 

“Target hasn’t found a formula that works in this macroeconomic environment,” Emarketer senior analyst Zak Stambor said regarding the quarter. “While it says it will have lowered prices on nearly 10,000 items by the end of the holiday season, that strategy isn’t enough to convince shoppers to spend.”

While other retailers may rely more heavily on Q4 to deliver the bulk of a year’s profit, Target still generated 32% of its annual operating income from holiday sales last year, according to S&P Global Ratings — which drives home the importance of performance over the next few weeks. 

But on Black Friday, Target had something that no other retailer did: Taylor Swift. Specifically, it had exclusive product offerings. 

The pop star’s “The Eras Tour Book” was available only at Target in the U.S. and sold nearly 1 million copies in its first week. The tome became the fastest-selling new release book of the year, and the second highest adult nonfiction release — behind Barack Obama’s “A Promised Land,” — since Circana began tracking the category. 

“There is a key difference, though,” Circana stated in a recent note regarding those top two books. “Taylor Swift’s book was available through Target only, while Obama’s book was available from all major book retailers.” 

Target also had Swift’s “The Tortured Poets Department: The Anthology” for the first time on CD and vinyl. 

But what lies beyond a pop star potentially saving Christmas? Target knows it is entering into a season where consumers are looking for value. 

Consumers “are looking for promos and deals when they’re shopping for those everyday essentials,” Target CEO Brian Cornell said regarding the fourth quarter. “And they are shopping carefully and taking some of those savings to find those unique items in discretionary categories that they really want. We think that’s going to continue.” 

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