Here’s what Black Friday means for investors and which stocks will benefit from the $6.7bn bonanza?

Because it is coming up in less than a fortnight’s time, let’s take a look at what Black Friday means for investors in ASX stocks. You may think it is an obvious answer (hint: A bump in sales), but it is not that simple.

What is Black Friday? And how did it spread to Australia?

Black Friday is the Friday after Thanksgiving, which is the 4th Thursday of November. And so in 2024, it will occur on Friday November 29. What many Australians don’t understand is that Thanksgiving is just as big (if not bigger) than Christmas. And Black Friday is to the States what Boxing Day is to us, a day after the major holiday where retailers try to entice shoppers with major deals.

This tradition has gradually found its way to Australian in recent years (don’t ask us exactly when because it isn’t clear), and it gets bigger and bigger. Roy Morgan has found Australians will spend $6.7bn – over 5% more than in 2023. This spending is actually only a fraction of the 6 weeks prior to Christmas with $69.7bn expected. The biggest sales will be in food, where $28bn will be spent, followed by hospitality ($10.6bn) and clothing ($5.7bn).

Here’s what Black Friday means for investors on the ASX

You will see a sales boost, obviously, and a special ASX announcement from many retailers proclaiming sales figures for Black Friday…if they are higher than the year before, of course!

This may provide a temporary boost in the share price if trading to start the year has been less than ideal. We are right in the middle of AGM season when companies often make trading updates, and will have to if the company’s performance materially differs from its guidance. Some already have.

Black Friday has potential to provide a misleading picture to investors that a consumer stock is doing better than it actually is. So the caution for investors is not to buy in just off the back of one announcement, but watch to see how the company has been performing over the last few years.

If you already own a stock, investors should watch to see how their company performs during the period. After all, some sectors are highly competitive and companies may not derive benefit if they cannot differentiate themselves from their competition.

So which stocks should you look for?

Given the above data that people will spend on food, hospitality and clothing, Most likely department stores like Lovisa (ASX:LOV), City Chic (ASX:CCX), Myer (ASX:MYR) and Premier Investments (ASX:PMV) as it currently is – although watch out for the spin-off of Premier’s clothing brands. JB Hi-Fi (ASX:JBH) may be another to derive some benefit.

Woolworths (ASX:WOW) and Coles (ASX:COL) will see higher sales, but don’t expect either to issue one-off announcements stating their performance on the day. In fact they may only give a figure for the 1st half of FY25 and not even single out Black Friday. One final stock we’ll mention is Shaver Shop (ASX:SSG), which benefited during the pandemic because people had to do DIY haircuts! Despite sales returning to normal levels, it has gained over 20% this year. We’ll be curious to see how this stock performs.

Conclusion

Investors shouldn’t make decisions to buy and sell off the back of optimism a company will do well on Black Friday, or take too much off the back of how a company performs. Many companies will get a boost, but it may just mean a poor sales year could be a little less poorer.

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