Industry: Our Aggregate Visits dataset saw an acceleration in this week’s update, continuing the improving trend that we have seen since mid-January. Redbook continues to follow suit with a stabilized and now accelerating trend over the same duration alongside a continued improvement and positive dynamic in tax refunds. We hosted our quarterly retail themes call yesterday, which can be viewed HERE, which outlines why we're notably more bullish today, with a balanced number of longs and shorts. The trends we see in the data supports that view.
- Notable Industry Callouts:
- Accelerations: Superstores, Discount & Dollar Stores, Shopping Centers
- Decelerations: Beauty & Spa, Home Improvement, Clothing, Car Shops & Services, Recreational & Sporting Goods, Hobbies, Gifts, & Crafts, Department Stores, Electronic Stores, Pet Stores & Services
Companies: Numbers below = YoY Rate of Change from week to week
- Notable Accelerations: Abercrombie & Fitch (ANF) +28%, Marine Max (HZO) +18%, Adidas (ADDYY) +16%, Dollar Tree (DLTR) +15%, H&M (HNNMY) +14%, Aritizia (ATZAF) +13%, Warby Parker (WRBY) +11%
- Notable Decelerations: Ollie’s Bargain Outlet (OLLI) -19%, Floor & Decor (FND) -13%, Lowe’s (LOW) -13%, Best Buy (BBY) -10%, Camping World (CWH) -10%
Company Callouts:
- Beauty Slowing More and Faster, Press the Shorts (ULTA—Best Idea Short | SBH—Best Idea Short | Sephora | Bluemercury). ULTA came out yesterday at the JPM Conference noting that trends were slowing more and faster than expected across price and product. Data hasn't looked good in recent weeks for the beauty space, and we've seen ULTA promotions kick up a notch in the face of a big Sephora sale. So putting that all together, No, it's not shocking in the least that ULTA guided down. We're pressing the short here, and it was apparent by the intra-day acceleration in volume and selling activity once the company broke TREND and TAIL support. We think that earnings expectations are still too high as comps decelerate, ULTA heavily promotes to protect its market share, Gross Margins come down (still 300-400bp ahead of pre-pandemic), and SG&A heads higher. In other words, EPS is likely headed negative – we think for a multi-year time period. This was the ultimate safety stock in retail during a series of Macro Quad 3 and Quad 4 environments – which characterized much of the past 2-years (when staples and staple-like factor styles traded very well, and we were bearish on discretionary). Now earnings are turning to the downside at the same time we're pivoting to Quad 1 and 2 (Quad 2 starting in May, which junkier Retail LOVES). We think the multiple will continue to compress as people realize estimates are too optimistic, and this isn't the story they thought they were underwriting. Ultimately, we think $300 is in play here. Stay short.
Chart List:
- Industry
- Companies
Source: Placer.ai
