Investing.com - Black Friday, the day after the US Thanksgiving holiday, is usually regarded as the start of the US holiday shopping season. However, Barclays (LON:BARC) BARC also sees upside for UK retailers from a strong quarter.
“Historically, we find that Black Friday has catalysed abnormal excess return for the FTSE All Retailers index. For example, retailers outperformed the FTSE All by 5.7% and 4.2% in the 30 days following Black Friday in 2019 and 2023, respectively,” analysts at Barclays said, in a note dated Nov. 27.
The UK Consumer should benefit from disinflation, the bank said, so strong Black Friday sales could be a potential catalyst in the short term. Historically, UK retail sales have grown by an average of 2.1% in November, so any figure above this would be a signal to add to UK retailers.
The bank’s working hypothesis is that when Black Friday has a good year, retail stocks tend to outperform the market because the windfall income would be reflected in their results.
A greater Black Friday surprise might suggest that the market has undervalued retailers ahead of the event, the bank said. If that is the case, we might also expect that the market repositions itself as more and more Black Friday news start flowing in, which can happen at any point during Black Friday week up to a few weeks later.
“We find that, when Black Friday month retail sales were above (below) expectations, the FTSE All Retailers outperformed (underperformed) by 2.5% (-4.3%) in the following month,” Barclays added.
“This result fits our thesis that the market needs at least 7 days after Black Friday to digest the news and data; it will reposition, if necessary, between 15 and 30 days after; and all the information will be priced in after two months.”