It was a head full of conflicting emotions for yours truly while navigating the malls over the past few days.
On the one hand, people were certainly out and about, looking for last-minute gifts. The malls were alive, reaffirming -- to me at least -- that not everything is bought online. People still love to touch and see the product they are plunking down good money to buy.
But even though the malls weren't dead, they weren't as strong as I would have liked, given the robust start to the holiday shopping season and ongoing stock market rally. I don't think this is any harbinger of a U.S. recession here -- rather an indication that people bought a good number of gifts early on in this season amid mouth-watering discounts.
Meanwhile, restaurants seemed emptier than the norm on Super Saturday, otherwise known as the last big shopping day of the year. But then again, there were lines out the door at Foot Locker (FL) stores and believe it or not, Pandora. Coats were sitting idle, despite the onset of the cold weather and deep discounts. Overall, discounts still felt high (especially in watches -- there is a deluge of smartwatches on the market this season), and it's something that should have investors in department stores such as Macy's (M) and J.C. Penney (JCP) mildly concerned on how the quarters shaped up. To stay long these names right now, one has to be fairly optimistic on how much volume each moved in order to offset their promotional investments.
Having said that, one thing remained very constant in my final store walks of holiday season 2016. That is the sheer domination of TJ Maxx (TJX) and its super discount chain Marshall's. In short, I think TJ Maxx is prepared to shock the hell out of Wall Street -- which already loves the company -- with its sales and earnings when it announces results sometime in February. Both Marshall's and TJ Maxx have been experiencing a thing of beauty over the past week. Robust lines, people gobbling up loads of merchandise and employees getting people's money at the some of the fastest speeds in the retail industry.
Here are some reasons why TJ Maxx won the holidays:
Significantly expanded (among the stores I was able to touch) assortments of home goods at Marshall's. And we aren't talking junk inventory, we're talking high quality stuff that looks straight out of the high quality section at Macy's (or in some instances Bloomingdales).
The bankruptcies of Sports Authority this year, coupled with department store closures, have filled TJ Maxx and Marshall's with amazing merchandise. Kudos to TJ Maxx's best in class buying team; it's amazing the high quality merchandise they were able to secure. I walked into several Marshalls, headed toward the sportswear and shoe departments and thought I was actually in a Nike (NKE) or Under Armour (UA) store. The prices were unbeatable on products that tend to go for double elsewhere.
Women's clothing section vastly improved at both chains. It wasn't too long ago that a Marshall's, for example, had the closeout merchandise from department stores that nobody wanted. You know, the extra large sizes and horrible colors. Not anymore. During my casual walks through the women's sections, the stuff was on trend, amazingly priced. There was even tons of athleisure stuff on the sales floor.
What sealed this piece from me today was a conversation in Marshall's on Sunday with a teenager in the sneaker section. He was scanning the Nike sneakers with an app, which caught my attention. So, I asked what he was doing. He said this holiday season he started a business of buying collectable Nike sneakers inside Marshalls and then selling them for double on EBay. What brought him to the store on Sunday was a pair of blue Nike high-top sneakers sweeping the internet that apparently Marshall's was selling. The company was selling them for $59.99, but the retail value is close to $2,000. Umm yes, insane, but oh, so telling.
Bottom line: TJ Maxx dominated this holiday season and is prepared to post a monster quarter in February. Expect analysts to jack up their estimates this week and into January and for the stock to make a new leg higher.