Black Friday fails to impress Wall Street

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Wall Street’s verdict on Black Friday is in, and it’s ominously reminiscent of the Steely Dan song of the same name:

“When Black Friday comes, I’ll stand down by the door, and catch the gray men when they dive from the 14th floor.”

Pretty bleak, but then so is the market’s reaction to the retail sector’s performance over the crucial post-Thanksgiving weekend.

Late in the trading session, with the Dow Jones industrial average down around 500 points, or about 6%, all but one of the 35 members of the Morgan Stanley index of retail stocks are down for the day. The losers run the gamut, from electronics giant Best Buy (down 8.4%) to department store J.C. Penney (off 11%) to discount retailer Target (down 10%). Discounter Wal-Mart, which has enjoyed a decent run in recent weeks, is outperforming the broader market, down a relatively modest 3.7%.

The retailers aren’t the day’s worst-performing sector (financial shares get that dubious honor), but investors are clearly worried that Black Friday was black in more ways than one.

Despite much media attention given to shoppers storming storefronts to snap up flat-screen TVs and cashmere sweaters at huge discounts, “the strength did not carry through the weekend, as business fell off sharply on Saturday,” John Morris, an analyst with Wachovia Capital Markets told the Associated Press.

Chris White, a toy industry analyst with Wedbush Morgan Securities in Los Angeles, said in a report to investors today that checks over the weekend at Wal-Mart, Toys R Us and Target stores — which account for a lot of toy sales — indicated a “light” level of traffic. “Even Black Friday felt more subdued than in prior years,” White said.

RCT ShopperTrak, a research firm that tallies sales at more than 50,000 retailers, said Friday sales were up 3% compared with last year. (The firm is expected to release its results for the rest of the weekend later today.) But analysts fretted that all those red-tag sales and door-buster bargains trotted out to lure recession-weary shoppers might mean that much of that sales growth doesn’t show up on the bottom line.

There were even concerns that today’s “Cyber Monday” shopping spree may not be the boon for retail sales that it has been in the past. Originally a day when online holiday shopping shifted into high gear as workers returned to their desks — and their computers — Cyber Monday may be declining in importance as more Americans get high-speed Internet access at home.

In addition, despite the onslaught of coupons e-mailed to cyber-shoppers across the land, buyers may still keep their virtual wallets closed in expectation that there will be even bigger bargains in the offing as Christmas approaches.

In other words, classic deflationary behavior — and perhaps the real reason the market is giving back a big chunk of last week’s gains.

-- Martin Zimmerman