Struggling retailers aren’t pretending the U.S. consumer is in great shape anymore. But even companies like Best Buy, which brought its earnings guidance down for Q2, aren’t bearish enough, says Retail analyst Jeremy McLean.
“There’s definitely an underlying improvement in the consumer environment baked into these guides,” McLean explains in this clip from The Call @ Hedgeye. “We think the consumer can get less bad, but it’s not going to be anywhere near as good as these guides imply.”
“That’s emblematic of everything in the consumer,” adds Keith McCullough.
Best Buy, which began the month of February with a stock price over $90, now hovers around $70. The “Best Idea” Short is underperforming, even by the standards of a Retail sector (XRT) which is down over -20% over the same period.
“I’ve followed this company for 24 years,” McCullough says. “Never is a down -6% to -10% comp a bullish catalyst. I don’t care what they say. It’s absolute deleveraging on a very low margin business.”