Key Points: The low-end has been struggling for a while, but recent commentary from McDonald’s, Dollar Tree, Five Below, and others has fueled investor concerns. The aim of this report is to add clarity to the debate, and to determine whether a bet on the low-end makes sense.
Key Points: When it comes to the consumer, market participants spend a lot of time and energy studying the demand side of the equation. Supply dynamics often get short shrift. In this report, we analyze the supply of labor, the supply of fixed capacity, and the supply of inventory. Understanding the supply side can also tell us something about where inflation is headed.
Key Points: There were more than a few landmines in the consumer sector during Q1 earnings season, and lately, it’s been bellwether stocks like Starbucks, McDonald’s, Nike, and Lululemon that’ve been sounding the alarm. The aim of this report is to understand whether Q1 results signal a softening consumer, or if the issues are idiosyncratic in nature.
Key Points: The gig economy remains a mystery. It’s estimated that 25% of the population participates in informal work, but their efforts are not captured in official statistics. If they were, employment would be higher by as much as 4%. The gig economy has spawned some interesting business models like Uber and DoorDash. This report offers a perspective on those platforms and compares them to other delivery-based models, including Dominos, Amazon and UPS.
Key Points: There’s been a wide divergence of returns among consumer stocks over the past year. In the process, we’ve seen valuations converge. In this report, we dig into valuation – our aim is to determine whether it should play a central role or a supporting role in the stock selection process. We also seek to identify opportunities that boast both solid fundamentals and attractive valuation.
Key Points: Brands are supposed to be more valuable than resellers, but Costco’s stock has outperformed Pepsi, Dick’s has fared a lot better than Nike, and Ulta has bested Estee Lauder. This report analyzes dynamics in the footwear, beauty and home furnishings industries to understand what, if anything, is afoot.
We hosted a webinar to review the state of the consumer and to detail why 2025 might hold a few surprises. We dive into the labor markets with a focus on immigration; we assess the implications of other policies such as tariffs and taxes; we explore household balance sheets to understand how wealth and leverage might influence consumer spending. Our take is that a softening consumer will impact the interest rate environment, and that in turn, can have meaningful implications for stock selection. The slides…
Brinker has been on a tear. Same store sales have been ripping even as other restaurants are struggling. We talk with CFO Mika Ware who has a unique perspective on the company’s turnaround. It’s a classic case of blocking and tackling — slimming down the menu, simplifying recipes, improving standards, and killer marketing that’s informed by insights and data. It sounds like Brinker has more work to do at Chili’s, and it might be able to replicate that success with other banners.
Bill Rhodes led AutoZone for nearly 20 years. Over that time, the auto parts industry faced major change — auto cycles have come and gone, the industry has consolidated, e-Commerce has altered the landscape, and vehicles have become laden with technology. So far, it seems that the more things have changed, the more they’ve stayed the same — AutoZone has remained relevant to its customers and its business model has stayed the course. More change is on the horizon — EVs are making inroads, etc. …
Friday’s revision to income and spending data has caused confusion. We’ve prepared a 10-minute podcast to review the investment implications. Some of the changes can be disregarded as noise, but there are three important takeaways. First, the latest iteration of personal income is highly disconnected from labor market data. Second, this is not the first time savings rates have been meaningfully revised, nor will it be last. Investors should move on from using the savings rate as an investable data point. Household balance sheets are…
Yesterday, we caught up with Carol Tome, the CEO of UPS. We covered a lot of ground … as UPS typically does! We talked about the state of the global supply chain, the shift between goods and services, the de minimis rule, tariffs, UPS’ relationship with Amazon, the labor market, driverless vehicles, drones, AI, and more. Click the link to view our 20-minute interview. So far, we’ve hosted the CEOs of Delta, Home Depot, and UPS. There’s more to come. Sign up for our podcast…
We’ve been getting a lot of questions from clients about the low-end consumer, so we assembled a deck of charts to walk through the pros and cons of betting on the low-end. There are a lot of variables to consider, and we walk through a chunk of them on this podcast, including job-finding prospects, wage growth, SNAP benefits, tariffs, interest rates, and stock price performance. As always, feel free to reach out with questions.