11/15/23 02:18 PM EST

Retail | Detailed Traffic Analysis 11-15

Brian McGough

Jeremy McLean

Arianna Petillo

Ryan Wilson

Takeaway: Visits Decelerate After Last Week's Major Accel. Earnings Look Ahead. Still Bearish.

Industry: Last week, Aggregate visits data saw an abberational 7-point acceleration from -9.2% to -2.2%--which was a major move given the underlying components of the data. As expected this week we saw a return to 'normalcy' with visits slowing by -320bps from -2.2% to -5.4% YY. Because of the acceleration last week, the 5Wk Avg trend continued to see a slight acceleration from -6.3% to -5.9%. At the same time, Redbook Retail Sales continued to decelerate, albeit slightly this week, from +3.1% to +3.0%. No shocker that today’s Retail Sales release showed that Total Retail Ex Food, Gas, & Auto slowed from +3.5% in September to +2.8% in October. We still expect continued pressure on traffic and spending as the consumer weakens into what we believe will result in a 1Q24 recession. The street expects earnings growth in Retail of ~35% for 2024 (with adjustments to come after earnings season), while we think it is going to be negative. As we always say, companies operating in the Retail space do not know what their numbers will be one quarter out, let alone 1 day out. So be careful what sort of growth you are underwriting in this consumer environment.

Notable Industry Callouts: Every subsector except Electronics and Hobbies, Gifts, & Crafts saw a deceleration this week after last weeks major acceleration across the board.

Companies: Numbers below = YoY Rate of Change from week to week

Notable Accelerations: Aritzia +19%, Bloomingdale’s Outlet +16%
Notable Decelerations: Zara -13%, Burlington -12%, Academy Sports + Outdoors -12%, Bass Pro Shops -11%, Bath & Body Works -11%, Bluemercury -11%, Ollie’s Bargain Outlet -10%, Take 5 Oil Change -10%

Earnings Look Ahead: 2-Weeks Out

Dick’s Sporting Goods (DKS—Short Bias): Consensus Sales Expectation: -0.4%