Beware these retailers that leaned heavily on Black Friday promotions, BMO says

Some companies leaned harder on discounts over the course of Black Friday weekend compared with their historical precedent — and that could be a negative sign about their performance, according to BMO Capital Markets. Some retailers “promoted deeper as weekend progressed versus 2023’s cadence,” analyst Simeon Siegel wrote to clients in a Monday note. That is “potentially suggesting underperformance vs. initial plans.” Siegel’s comments come as investors and analysts try to determine which brands or retailers are outperforming this year, particularly as the holiday shopping season hits its stride. Retailers have been competing for dollars from shoppers who have been more choosy on where and how to spend due to inflationary pressures seen over recent years. To be sure, the push to lower prices more than in prior years is not an exact science for understanding how a company performed during the busy shopping weekend, or how it will go on to do over the rest of the holiday season. However, Siegel did provide a list of names that went further into discounts than was anticipated as the weekend went on. Here are the brands, along with their parent companies and stock tickers: For many brands under Gap — except its full-price eponymous label — Siegel said shoppers saw larger price cuts over the course of the weekend than is historically expected. That means the company may have “underperformed its initial hopes for the outset of the holiday selling,” the analyst said. Brands owned by Gap include Old Navy, Athleta and Banana Republic. Gap jumped more than 6% in Monday trading, raising its year-to-date gain above 23%. While the majority of analysts polled by LSEG have a hold rating, the average price target implies upside of around 8.5%. Nordstrom ‘s value-focused Rack brand, meanwhile, offered a new “flash sale” on Friday, Siegel said. Despite that cause for concern, the stock is up about 25% this year after climbing around 1.5% on Monday. After that run, the typical analyst sees shares slipping by 3% over the next 12 months, according to LSEG. Most analysts have a hold rating on the stock.