The XRT sits about 5% above its lows from the fall, yet with the start of downward earnings revisions the P/E multiple has crept up to 16.5x vs around 11.8x at that fall low. The market is hoping the bottom is in for retail/consumer, yet we think there is a lot more downside risk to go on both earnings and multiples over the next 3 to 6 months. Despite efforts to clear product, retail inventories remain elevated, as the consumer continues to slow and while we are still consuming at levels far ahead of what we should expect in economic recession. It is going to be a very interesting few months ahead for retail. We think we’ll see a record number of negative pre-announcements in January, which will be the precursor to another round of severe resets in the Spring. People will be tempted/inclined to cover/buy the initial negative holiday earnings revision, but we think it should be pressed.
On Wednesday January 4th at 2pm ET we are hosting a Retail Themes call for 1Q2023. Here we’ll provide our take on the setup for consumer/retail earnings and positioning on stocks as we head into calendar 2023.
Topics to include:
- 3Q Earnings Teardown and New TREND Expectations.
- Inventory Trends
- State of the US Consumer
- Retail Cycle Valuations
- Retail Debt And Cash Flow Risk
- Private Label Retail Card Income Trends
Call Details
Date/Time: Wednesday, January 4th at 2pm ET
Add To Calendar Link CLICK HERE
Live Video Link CLICK HERE
