By Nandita Bose and Melissa Fares
NEW YORK (Reuters) - Shoppers across the United States snapped up deep discounts on toys, clothing and electronics both online and at stores on Black Friday, giving retailers a strong start to their make-or-break holiday season.
A healthy economy and rising wages gave people the confidence to splash out on retailers' annual raft of bargains.
“The prices today are very good,” said Jose Manuel Cruz Hernandez, 59, who hit the Del Amo Fashion Center in Torrance, California, with his sister Paulina Cruz, 66, who comes every year from Mexico City to shop.
The pair spent $120 on princess dolls and other toys at the Walt Disney (NYSE:DIS) Co store, where items were 20 percent off. They spent a similar amount at Gap Inc (NYSE:GPS), where items were discounted by about 55 percent.
Cruz Hernandez, a foreman at an aerospace firm, said he was comfortable with the U.S. economy and his own finances and plans to spend another $1,000 on holiday gifts - about the same as last year.
A similar story played out online, where shoppers spent $643 million by 10 a.m. ET, up 28 percent from a year ago, according to Adobe (NASDAQ:ADBE) Analytics, which tracks transactions at most of the top U.S. online retailers. Smartphone sales in particular contributed to gains.
Foot traffic looked healthy at stores offering discounts, although detailed numbers on brick-and-mortar holiday sales will not be available for several days.
"Overall, Black Friday doesn't have the sense of urgency as in the past and feels more like a busy regular weekend day in many of the stores," said Dana Telsey at Telsey Advisory Group.
"Many of the promotions were available for the past couple of weeks," Telsey said. "We haven't noticed desperation from any retailer."
Shares of Macy's Inc, Kohl's Corp, and Target Corp (NYSE:TGT) all closed down on Friday and weighed on the broader S&P 500 retailing index, which closed down 0.56 percent.
Investors are concerned retail sales growth may have peaked in the second quarter and business will slow down as comparisons get tougher, said Brian Yarbrough, retail analyst with Edward Jones.
Victoria's Secret owner L Brands (NYSE:LB), Walmart (NYSE:WMT) Inc and American Eagle Outfitters (NYSE:AEO) rose. J.C. Penney Co Inc ended flat and Amazon.com Inc (NASDAQ:AMZN) closed slightly lower.
The overall stock market finished a shortened session with losses.
STRONG ONLINE SALES
Early numbers showed overall retail sales, both in stores and online, were in line with expectations, according to Mastercard (NYSE:MA) Inc's SpendingPulse retail report. The firm expects overall Black Friday sales to top $23 billion this year, up from $21 billion last year.
Mastercard combines sales activity in its payments network with estimates of cash and other payment forms. It said cold weather in the eastern United States and wet weather in the west may be pushing more consumers online.
Online spending is on track to hit $6.4 billion on Friday, Adobe said. Online sales on Thanksgiving Day were up 28 percent at $3.7 billion.
The National Retail Federation forecast U.S. holiday retail sales in November and December will increase between 4.3 and 4.8 percent over 2017 for a total of $717.45 billion to $720.89 billion. That compares with an average annual increase of 3.9 percent over the past five years.
About 38 percent of American consumers plan to shop on Black Friday, a Reuters/Ipsos poll showed last week.
Very cold weather in the U.S. Northeast may have kept some shoppers at home, although industry analysts also reported added demand for coats and other warm clothing. An Athleta clothing store in Tysons, Virginia, provided hot chocolate with marshmallows to women in line for the dressing room.
DEAL FRENZY
Shoppers picked up big-ticket items such as TVs, Apple Inc (NASDAQ:AAPL) iPads and Watches at Target, while phones, toys, gaming consoles and cookware were top sellers at Walmart Inc.
Many shoppers sought out air fryers, which do not use oil to deep fry food and Instant Pots. Kohl's Chief Executive Michelle Gass told CNBC the company was selling 60 Instant Pots per minute online on Thanksgiving Day.
While most retailers have not changed their deals and discounts year-over-year, many have moved their start dates earlier and offered more teasers, according to deal site RetailMeNot.
The deepest discounts in apparel and accessories were offered by Michael Kors, which ran a 60 percent discount sale; Gap, which offered 50 percent off site-wide; and Nordstrom (NYSE:JWN), which gave away up to 60 percent on merchandise.
Other deals included:
* An H&M store in Manhattan offered 30 percent off everything in-store and online.
* Macy's in Herald Square (NYSE:SQ), Manhattan, sold a Coach designer wallet, originally $225, for $53. Coach bags there, originally $259, were half off.
* Midtown Comics was taking 25 percent off everything at its three Manhattan locations until noon.
* An Eddie Bauer in Chicago offered 50 percent off all items.
* At a Chicago-area Pandora, which sells popular charm bracelets that can cost up to $1,000, jewelry was 35 percent off before 10 a.m. and 25 percent off for the remainder of the day.
* J Crew clothing was 50 percent off. Its site experienced some technical difficulties.
* Walmart was selling a Google (NASDAQ:GOOGL) Home mini for $99.
REPLACING A TOY STORE
Many retailers, reacting to the bankruptcy of the Toys 'R' Us chain, are catering to parents.
Target said in October it planned to dedicate nearly a quarter of a million square feet of new space to its toy business across 500 of its stores.
“Toys 'R' Us had better quality for toys,” said Ashley Drew, 29, shopping for her 5-year-old daughter at a Los Angeles-area Walmart, next door to the empty shell of a Toys 'R' Us store.
Department store JC Penney, known for its mid-priced apparel, has also made a push into toys.
Carolyn Pertette from Wilkinsburg, Pennsylvania, shopped in the early morning at the Waterfront Mall in Pittsburgh.
"I'm concerned about where I'm going to get toys," she said.