Industry: Aggregate YY Visits slightly accelerated from -6.4% last week to -6.1% this week, however, the 5Wk Avg trend continued negative from -4.3% to -4.9% this week. As we have been highlighting over the past two months, visits are staunchly negative, with plenty of more room to fall given the weakening consumer. With Redbook Retail Sales slowing this week from +4.6% to +3.1%, it is the first week of slowing sales and accelerating visits that we have seen in a long time. Yet, the stark divergence between the two data sets remains. Again, basket is up, inflation continues to come in hotter, personal savings rate is down, and there is potential trip consolidation/higher units per transaction as shoppers look to be more targeted in their spending. Nonetheless, looked at over a multi-week time period, there is no question that retail is slowing.
- Notable Industry Callouts: Beauty and Spa Store visits were flat this week but are clearly cracking overall after being one of the only strong industries over the past few months. This week, the 5Wk avg continued to decelerate from +7.4% to +5.8%. Best Idea Short ULTA & SBH. Home Improvement also continues to weaken, supporting our call on the space, with visits decelerating again from -11.1% to -11.8% YY and -9.4% to -10.4% on a 5Wk Avg basis. Best Idea Short LOW, HD, & FND (in that order). Lastly, Electronics Store continues to look like death, with visits decelerating again from -13.1% last week to -15.0% this week. On a 5Wk Avg basis, visits also decelerated from -8.6% to -10.4%, continuing the incredibly strong negative trend in the space. Best Idea Short BBY & GME. Overall, the slight acceleration in aggregate visits was supported by accelerations in Recreational & Sporting Goods, Hobbies, Gifts, & Crafts, Department Stores, Discount & Dollar Stores, Pet Services & Stores, and Clothing Stores.
Companies: Numbers below = YoY Rate of Change from week to week
- Notable Accelerations: RH +16%, Casual Male XL +14%, Pandora +14%, Kate Spade +13%, Gap +12%, Homesense +12%, Nordstrom Rack +10%, La-Z-Boy +10%
- Notable Decelerations: Aritzia -34%, Allbirds -33%, West Marine -15%, Vuori -12%, Sephora -10%
Custom Weekly Visits: Custom samples of specific stores that are not made readily available by Placer.ai.
- Key Callouts: There were big visit moves in Best Idea Long RH this week as the trend in RH Gallery Stores accelerated from -15.9% to +0.9% and RH Outlet Stores accelerated from -15.5% to -9.3%. On a 5Wk Avg basis, the trend continues to improve at both store types, with RH Gallery accelerating from -12.1% to -10.8% and RH Outlet from -24.1% to -20.4%. This is a very notable acceleration for RH and is significant given that our sample is on a comparable store basis, however, it does not include the visits impact from RH England. It is also interesting given the divergence from competitors Williams-Sonoma and Arhaus, which both saw significant decelerations this week. Best Idea Long RH, Best Idea Short WSM, Short Bias ARHS. Our Mister Car Wash sample saw a massive deceleration from +3.6% last week to -11.3% this week on a challenging compare. Golf Course visits continue to trend negatively with visits decelerating again from -2.8% to -7.7%. Best Idea Short GOLF and Short Bias MODG (see Top Golf, PGA Tour Superstore, and Golf Galaxy decelerations in company charts below). Lastly, we added a new proprietary data set in Penske Automotive Dealerships. We will continue to conduct more research on the auto retailer space moving forward and currently have CVNA on our Short Bias List.
Recent Winners & Losers: Another week of big losers and few winners.
- Losers: Beauty & Spa – ULTA, Sephora, SBH. As we highlighted in our industry callout above, the relative strength across the beauty industry is coming to an end… This trend is clearly reflected across the major players in the industry. This week, Best Idea Short ULTA visits were flat at 5.4%, but on a 5Wk Avg basis decelerated from +10% to +8% and sit -7% lower than 5 weeks ago. At Sephora, things are no different. This week, visits decelerated from +39.6% to 29.1% YY and from +48.5% to +43.0% on a 5Wk Avg basis. Like ULTA, Sephora sits -21% below 5 weeks ago on a ROC basis, reflecting the weeks long deceleration in visits across the industry. Lastly, Best Idea Short SBH visits are right in line with ULTA and Sephora. This week, visits slightly accelerated from -19.5% to -18.1%, but remain squarely negative. On a 5Wk Avg basis, visits saw flat ROC at -18.6%. However, over the past two months visits are sitting roughly -10% lower and have been on a steady decline since the beginning of the year (contrary to the relative strength across beauty). Beauty is cracking and the way to play it is by being short ULTA and SBH. Best Idea Short ULTA & SBH.
- Losers: Electronics Stores – BBY & GME. Visits across the electronics industry look god awful and are continuing to decelerate sharply. This week, Best Idea Short BBY saw visits decelerate again from -13.4% last week to -16.3% this week. On a 5Wk Avg basis, visits decelerated from -8.6% to -10.6% and sit -9% lower than 5 weeks ago. At Best Idea Short GME, things are no different. This week saw a slight deceleration from -13.5% to -12.0%, but the 5Wk Avg trend continued to decelerate from -9.8% to -10.9%. This industry calls into question where consumers want to spend their shrinking (in value and total amount) dollars, while heading toward a Quad 4 environment. As inflation accelerates and student loan payments return, will consumers prioritize discretionary electronics? We do not think so, especially since this category over-earned throughout the pandemic… Best Idea Short BBY & GME.
- Winner (and Continued Losers): RH (WSM & ARHS). As we highlighted above, Best Idea Long RH visits are trending positively over the past few weeks, especially compared to the likes of Best Idea Short WSM (and Pottery Barn) and Short Bias ARHS. Overall, RH visits were flat this week, up from -16.0% last week and are sitting 10% higher on a ROC basis than 5 weeks ago. Broken out, RH Gallery Stores accelerated from -15.9% to +0.9% and RH Outlet Stores accelerated from -15.5% to -9.3%. Comparatively, Williams-Sonoma saw a massive deceleration from -6.7% to -14.3%, Pottery Barn saw a slight acceleration from -14.3% to -9.6%, and Arhaus continued to falter from -28.8% to -33.1%. Clearly, there is a strong divergence between the luxury home furnishing names right now, and we are confidently positioned on the right side of it. Best Idea Long RH, Best Idea Short WSM, Short Bias ARHS.
Charts:
- Industry
- Custom Chain
- Companies
Source: Placer.ai
