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.
Key Points: Another earnings season is winding down. As a group, the 140 consumer stocks we track grew Q4 revenues by +4%. Profits grew marginally but were +6% excluding the volatile auto sector. Normalization was evident in the results. Leisure stocks are still in recovery mode. Durables are battling a post-COVID hangover, and both autos and staples are struggling to get price and volume back into balance. This report is a consumer 10-K of sorts
Key Points: Amazon might be a tech stock, but its business model is very physical. Andy Jassy recognizes that. Since he took the helm, Amazon’s employee count is basically flat, fulfillment center growth has slowed to 8%, and AWS has extracted two additional years of service from its data centers. Mr. Jassy is squeezing blood from a stone, and the aim of this report is to figure out how much opportunity remains, and what’s baked
Key Points: Spending on leisure has begun to recover, but if the category’s PCE share were to return to trend, revenues would grow +10-12% in each of the next two years. That’s more than double the pace of overall consumption, and it doesn’t even presume a recovery of sales that were lost during the pandemic. We think leisure stocks have legs.
Key Points: Over the past year, the market was convinced that higher rates would derail the consumer, but that’s not what happened. The debate is likely to get turned on its head this year – some are suggesting that falling rates will stimulate consumption, but we’re not taking the bait just yet.
Key Points: We’ve been bullish on the consumer for the past two years and at the same time, we’ve been skeptical that the low-end would be able to keep up. Stocks that cater to the low-end have indeed underperformed, and our sense is that investors have written the cohort off as a problem child. We’re starting to see reasons for optimism. Our original concern was that the low-end ran through “excess savings”, but that’s one
The consumer has been a juggernaut, but the math doesn’t add up. Employment, the engine of consumption, has stalled. It’s not because of AI — that risk is still in front of us. The high-end has been driving PCE, but the “wealth effect” is probably not as durable as some suggest. Our math says a 2% change in home values is worth as much as a 10% move in the S&P. We are cautious on leisure. It makes sense to own retailers during a brand-emic.
We’ve been expecting the consumer to hit a soft patch, and recent employment data have made that outcome more likely. Fiscal stimulus and rate cuts will help stave off a bigger issue, but portfolios might still need to be reoriented. We think rate-sensitive names will continue to work — we’re especially fond of housing-related stocks. And, we built three frameworks to identify stocks that can bridge a gap. They identify issues with (i) pricing power, (ii) asset-light models, and (iii) good shock absorbers.
This webinar details our outlook for the consumer. H2 ’25 will be turbulent due to a lopsided employment picture, incomes that are not as strong as they appear, an immigration headwind, collateral damage from student debt repayment, and tariffs. We expect the consumer to recover in early ’26 due to stimulus, but investors might want to be prepared for a choppy ride. We recommend finding stocks with pricing power and bulletproof business models. We introduce a couple of frameworks to help chart the course.
There’s a lot going on in consumer land, and this webinar measures the headwinds and tailwinds facing the consumer in 2025 and 2026. Late last year we grew concerned that the consumer was off kilter — employment and spending trends were unbalanced, and we were concerned that policy would dampen spending growth. Now that fiscal stimulus is in the works, our outlook has turned more neutral. There’s lots of math in this presentation, especially as it pertains to policy — immigration, tariffs, and fiscal stimulus. …
We’ve been cautious on the consumer for the past six months. It’s not just about tariffs. Employment growth is lopsided, PCE growth has been of low quality, immigration will soon begin to weigh on aggregate demand, the credit impulse is muted, the “wealth effect” is reversing, and real wage growth is already slowing. Tariffs are a headwind, but they don’t anchor our view. This 30-minute webinar walks through a ton of useful data.
We hosted a timely webinar that outlined a few tail risks. Employment growth is being driven by acyclical sectors like government and health care. Both of these are under a microscope. Job gains are heavily skewed to large firms with over 500 employees. That adds risk to the equation. Immigrants have also been driving the train, but for how long? Tail risk is also discernible within PCE. Obscure categories are growing twice as fast as “bankable” categories. Have a listen!