Industry: Aggregate Visits data is now back to slowing trend after a two-week visits acceleration, as visits decelerated from -5.1% YY to -5.8% YY in the latest weekly update. 5Wk avg visits also bucked the improving trend and decelerated from -4.9% to -5.6%. As we continue to near the year end, we are about to lap tougher visit compares from last years mid-December to January spike. So, unless the consumer can continue to draw down the savings rate and lever up to unprecedented levels, we do not think there will be a material visits acceleration in the coming weeks. Looking back over the past year, though, we saw visits peak at +15% YY in January, to hit trough levels of roughly -10% YY multiple times in both May and October. As we’ve highlighted in the past, the Street expects earnings growth of +35% in 2024, while we think growth could easily be negative.
- Notable Industry Callouts: Visits slowed across the board in our Industry sub-category sample this week. Often there is a divergence in rate of change between the more and less discretionary categories as consumers focus on one or the other, but in this current and coming economic environment, we expect all industry participants, discretionary or not, to take a hit -- and that appears to be playing out in the data.
Companies: Numbers below = YoY Rate of Change from week to week
- Notable Accelerations: Aritzia +13%, Vince +13%
- Notable Decelerations: Ethan Allen -17%, Tiffany & Co. -12%, Zara -11%, Pandora -11%
Sub-Category Year in Review:
- Discount & Dollar Stores. In a weaker consumer environment, it makes sense that visits across the Discount & Dollar Store complex will hold up better than retail in aggregate. With that being said, we have still seen visits across all the boxes slow throughout the year (albeit at a much more stable pace than other sub-categories). Stock performance in the space has been incredibly mixed throughout the year, too. On the one hand, FIVE and OLLI have seen relative steady outperformance as they continue to comp positively, beat expectations, and hold/raise guides. On the other hand, the formerly perceived safety stock DG—which had seen consistent outperformance over the past 13 years—was cut in half since December 2022 after multiple misses and guide downs. Our only current call on the space is Short Bias FIVE, but that could easily change soon given the developing opportunities in Discount & Dollar Stores.
- Car Shops & Services. Like Discount & Dollar Stores, visits across the Car Shops and Services space should be more stable than retail in aggregate given its less discretionary nature. While in a weaker consumer environment there is inevitable pressure on any business, people still need their cars in a serviceable condition to get through their daily lives. But, also like Discount & Dollar Stores, we’ve seen visits across the space slow throughout the year—even heading negative in October and November—as consumer defer maintenance to free up spending in the short-term. Stock performance across the space was a mixed bag this year, too. Industry leaders AZO and ORLY continue their incredible outperformance, while laggard AAP continues to disappoint. On the quick service side, Best Idea Long VVV remains an incredible long opportunity with unit growth and a value prop that the consumer is moving toward, while Best Idea Long DRVN—which was cut in half earlier in the year on a revaluation lower of the car wash business—also maintains a strong business in Take 5 Oil Change.
Charts:
- Industry
- Companies
Source: Placer.ai
