Industry: Our Aggregate Visits Data continued its decelerating trend, moving from -6.1% YY last week to -7.1% YY in this week’s update. 2Yr Avg follows suit at a slower pace, decelerating from -5.7% to -6.0%. As we highlighted last week, as we continue to near the year end, we are lapping tougher visit compares from last year’s 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. However, as we see in the November Retail Sales data, which accelerated from +2.5% to +4.9% YY, consumers were able to do just that for holiday spending… What the future holds, we do not know, but either way it sets up for a very bearish 1H ’24. 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: Every sub-category saw a deceleration this week except for Pet Stores & Services, which accelerated from -8.5% to -6.7%. 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: Tory Burch +16%, Pandora +11%, Homesense +8%,
- Notable Decelerations: Urban Outfitters -12%, Aritizia -10%, Tractor Supply Co. -9%, Lovesac -9%, Bath & Body Works -7%, Anthropologie -7%
Sub-Category Year in Review:
- Beauty & Spa Stores. Like Discount & Dollar and Auto Maintenance & Repair, visits across the Beauty & Spa spectrum generally hold up better in a slowing consumer economy given the more consumable/staple-ish nature of the products. 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. Earlier in the year, cracks at Best Idea Short ULTA began to form and the stock traded down ~25%, however in recent weeks the stock is back up to the 480 level. Our ULTA short thesis remains, though, as beauty is still overearning and ULTA will have to take a hit to margins to protect its market share against competitors. Likewise, Best Idea Short SBH, which we rode down for a ~30%+ short, has also squeezed higher in the recent months.
- Home Improvement Stores. Unlike the other three categories, Home Improvement visits have taken a major hit as consumers pulled forward demand for home improvement during the pandemic and are now putting off home maintenance & projects to free up spending for necessities. LOW, HD, & FND are all Best Idea Shorts, while TSCO is on our Short Bias List. While the shorts have yet to fully crack, our overall thesis remains, with the most juice coming from LOW.
Chart List
- Industry
- Companies
Source: Placer.ai
