Industry: Aggregate Visits did what it does best, decelerating from -5.9% to -6.7% after a recent uptick in visits over the past two weeks. On a 2yr avg, visits remained flat at -6.9%--stopping the 11-week trend of decelerating visits on the 2Yr, though this could change with revised numbers. With another acceleration in the Redbook Retail Sales from +4.6% to +5%, we think the consumer is still stretching their wallets to spend on goods, which might be bullish in the near-term, but, again, sets up a supremely bearish 1H24. As we called out last week, the current expected earnings growth in Retail is ~35% for 2024 -- while we think it's going to be negative. Be careful what kind of growth you're underwriting for next year and stick to Longs that have idiosyncratic drivers to grow the top line -- like AMZN, RH, NKE, FL, SKX, TJX and REAL. We're broadly short almost everything else -- top short ideas include HELE, GOOS, LOW, TPR, W, ADDYY and PANDY.
- Notable Industry Callouts: With the deceleration in aggregate visits that we saw this week, there were some pretty significant decelerations in out industry subcategories that we track. Seemingly non-discretionary, slow-mover Car Shops & Services decelerated again from -2.1% to -3.1% and we think it could be worse given the Best Idea Short MRNO print/call in which the company talked about deferrals causing industry wide unit pressure on Tires, which sounds like a negative read for the consumer as we hit these incremental spending headwinds at the same time the savings rate has fallen for a few months straight. The consumer can’t afford needed auto maintenance, and we think MNRO is losing share within the business slowdown. Recreational & Sporting Goods stores also saw a major deceleration from -8.4% to -12.3%, continuing the negative trend after a one-week major uptick. Short Bias DKS and VSTO. Likewise, Superstores declined from -5.7% to -7.2%.
Companies: Numbers below = YoY Rate of Change from week to week
- Notable Accelerations: Vera Bradley +16%, MarineMax +15%, Kay Jewelers Outlet +13%, Bluemercury +11%, Casual Male XL +10%
- Notable Decelerations: Lovesac -19%, Bath & Body Works -11%, Old Navy -10%
Earnings Look Ahead: 2-Weeks Out
ARHS: Quarterly Consensus Sales: -0.6%
UPBD: Quarterly Consensus Sales: -5.4%
FND: Quarterly Consensus Sales: +2.5%
DRVN: Quarterly Consensus Sales: +10.2%
CWH: Quarterly Consensus Sales: -7.7%
EWCZ: Quarterly Consensus Sales: +7.1%
WRBY: Quarterly Consensus Sales: +10.7%
BIRD: Quarterly Consensus Sales: -17.7%
Recent Winners & Losers:
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Losers & Winner: Beauty – ULTA, Sephora, Bluemercury. Visits at Best Idea Short ULTA continue to look directionally weaker despite the company’s attempt at boosting traffic with TWO sales events in the past few weeks. We continue to expect demand at ULTA (and across the space) to slow and margins to degrade significantly, especially if the company continues to offer additional items at a discount. After a very strong past two years of growth and margin expansion, Beauty is staring down the barrel of tough comps and high expectations. Best Idea Short ULTA and SBH. Likewise, Sephora visits are still weakening on the margin, though like ULTA, visits accelerated slightly this week. In contrast, visits at Bluemercury have absolutely exploded in the past few months after a bottom in late April, which is very surprising given the traffic degradation seen in Ulta and Sephora.
- Loser: Camping World. Unfortunately, big ticket RVs aren’t going to be what the consumer is spending on when they are staring down the barrel of a recession… we still like the name long term and have it on our long bias list, but traffic has clearly taken a turn for the worse at CWH.
Charts
- Industry
- Companies
Source: Placer.ai
