Best Buy (BBY) - Get Best Buy Co., Inc. Report , Walmart (WMT) - Get Walmart Inc. Report and Amazon (AMZN) - Get Amazon.com, Inc. Report all have one theme in common, making the market optimistic on their holiday quarters.
For starters, the National Retail Federation is expecting holiday spend to come in at between $727 billion and $730 billion for November and December, a 3.8% to 4.2% increase over 2018's result. This would be an acceleration over 2018's growth rate of 2.1%, as the American consumer has been strong for all 2019. Some estimates are for $1 trillion. Chief Economist at LendingTree, Tendayi Kapfidze told TheStreet lower interest rates and an easy comparable over 2018 (which saw holiday sales increase 2.1%), create a backdrop for 5% growth for 2019's holiday sales. But some analysts warn against many consumer discretionaries, as tariffs force them to raise prices enough to make them less competitive with off-priced retailers and consumer staples.
So let's get micro. Best Buy, Walmart and Amazon are all uniquely positioned to deliver products to consumers with high speed, leveraging their online capabilities to do so. And it's this year in particular that customers crave that convenience.
, posting adjusted earnings per share of $1.13, better than analysts expected $1.03. Revenue was $9.76 billion, beating Wall Street expectations of $9.71 billion. Management raised its full year 2020 EPS guidance to a range between $5.81 and $5.91, above the previous range of $5.60 to $5.75.
But here's where Best Buy is showing it can capitalize on the holiday quarter.
"We are promising free next-day delivery on thousands of items all season long with no membership or minimum purchase required," said CEO Corie Sue Barry on the company's earnings call. In retail, same-day and next-day delivery is key to capturing consumer market share. But it usually requires scale, capacity, cash and expertise to make that happen competitively. But one key asset a company needs to accomplish that is a strong online presence. Best Buy reported online comparable sales growth of 15% for the quarter. Plus, the company says 80% of online orders are ready to be picked up in stores 30 minutes after the order.
The risk with Best Buy? The stock rose 12% to $83.54 Tuesday after the earnings.
It may come as no surprise that Walmart is positioned to capture the speed and online trend for the holidays, but it's positioned particularly well in that regard for this year.
Bopis, or buy-online-pick-up-in-store, is a particular trend seen recently in retail and grocery (Walmart is heavily weighted towards groceries). The Bopis model could come in handy in 2019 as "We expect, however, the tight time frame between Thanksgiving and Christmas to be a boon for retailers with buy-online-pickup-in-store (BOPIS) capabilities," wrote CFRA analyst Camila Yanushevsky in a recent note. Walmart has aggressively expanded its Bopis capabilities in the past few years. And "With a last-minute time crunch this year, we expect sales generated from BOPIS to reach new heights," Yanushevsky said.
She also noted that page views on Walmart's websites have increased 29% for the holiday period so far. Search and website trends can often be a reliable sales indicator in retail.
Quite simply, Amazon is leading the charge on the speed and e-commerce trend.
"Amazon one-day [delivery] diving incremental demand and market share," wrote Morgan Stanley analyst Kimberly Greenberger in a recent note. "Amazon is once again changing consumer expectations and raising the bar for e-commerce, which will only make it harder and more expensive for others to compete with them." Greenberger is looking for Amazon to take fourth quarter 2019 retail market share of 28%, compared to 26% in the same quarter last year and 19% in 2017.
As for that online traffic trend, "Amazon.com traffic will surpass the aggregates across consumer discretionary industries this holiday season," said Yanushevsky.