Which Retailer Will Win Black Friday?

It is officially the week of Black Friday.  A time of the year when retailers battle it out in an effort to win over sleepless consumers.  However, JP Morgan (NYSE:JPM) already appears ready to declare a winner in the retailer space.

On Monday, JP Morgan downgraded Target (NYSE:TGT) from Overweight to Neutral.  The bank cited decelerating 2012 comps, peaking contribution from P-Fresh, and management turnover.  JPM has a price target of $58 for Target.  Steve Eastman, former head of Target’s e-commerce unit, has left the company for other opportunities, and the company’s CFO and chief marketing officers have announced that they’re doing the same.  Concerns have also been raised about Target’s online stability after the Missoni rush seen earlier this year.

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Yet, Target is confident about being able to handle its Black Friday rush.  Executive Vice President Kathy Tesija said during the company’s Third Quarter earnings conference call “On Target.com, Missoni demand created online traffic that outpaced any Black Friday or Cyber Monday in our history, putting a great deal of stress on our newly launched online platform. While we didn’t anticipate putting our new site through such a dramatic test at such a young age, we are quickly moving forward to make improvements, applying what we’ve learned from the experience to implement hundreds of fixes that will elevate the guest experience and enhance stability.”  Any problems with Target.com could be a big boost to online heavyweight Amazon (NASDAQ:AMZN).

Although JPM downgraded Target, it upgraded Wal-Mart (NYSE:WMT) from Neutral to Overweight.  Wal-Mart is the world’s largest retailer, but has seen its fair share of troubles.  Last week, the company finally reported an uptick in sales, after a nine quarter streak of declining sales.  Wal-Mart continues to narrow its margins by not passing on the full cost of inflation to consumers.  To lure shoppers back for the holidays, Wal-Mart recently brought back lay-away.  Although JPM may be bullish on Wal-Mart, investors should consider that many consumers no longer believe Wal-Mart is the lowest priced action.  A recent Deutsche Bank (NYSE:DB) survey of 50 popular holiday gifts, including Nikon Coolpix cameras and Samsung 3-D LED television sets, found that Amazon was 4.5% less expensive than Wal-Mart.

Other retailers to watch include: Macy’s (NYSE:M), J.C. Penny (NYSE:JCP), Gap Inc. (NYSE:GPS), Sears Holdings (NASDAQ:SHLD), Kohl’s (NYSE:KSS), Dillard’s (NYSE:DDS), and Nordstrom Inc. (NYSE:JWN).

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