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
This installment of our “Up-to-Data” podcast is more comprehensive than most. We take a step back to see what the latest data are telling us about the consumer. We cover the labor market, excess savings, the wealth effect, goods vs. services, household balance sheets, inventory dynamics, the housing sector, and leisure. Coming soon: Conversations with Corporate Execs. Many of our future podcasts will feature interviews with corporate executives. We’ll be talking to them about the consumer overall and trends in their business. Our first conversation…
The Presidential election is not far away, and this installment of our “Up-to-Data” podcast explores how policy might influence consumer behavior. When it comes to policy, there’s a lot to consider, and we’re especially attuned to distributional shifts that could occur as a result. The presentation also takes stock of household balance sheets, including the supply of credit. Finally, we touch on “inventory freshness” now that retailers have finished reporting Q1 results — the outlook for gross margins is still biased to the upside. The…
We’ve analyzed a ton of new data over the past week. Issue #4 of our podcast makes sure you are up to date. It walks you through incremental data from the Fed’s Senior Loan Officer Survey, April retail sales, e-Commerce penetration, Capital One, Discover Financial, Home Depot, the New York Fed’s household debt and credit report, the San Francisco Fed’s excess savings analysis, and more. We expect the consumer to remain strong. In our view, mixed signals from companies have more to do with lower…
In issue #3 we analyze immigration, excess savings, and the low-end consumer. Immigration has been a big contributor to the labor force, and with elections in the offing, it presents more than a trivial risk. We track the amount of construction put into place due to the CHIPS Act. We also offer an analysis of the US mattress industry. We compare units sold to normal, and we stack up the TPX business model to other vertically-integrated retailers/brands.
In issue #2 we analyze the effect rising energy prices may have on consumption. One month ago, energy prices would’ve been a 75 basis-point “good guy” for the consumer. Now it’s more of a marginal friend. We measure inflation by income cohort, also focus on credit card delinquency trends and the profile of housing inventory.
In Issue #1 we dig into macro issues like tax refunds, capital gains, the wealth effect, credit card application and rejection rates. We also look at excess savings for the bottom 40% of income, and the top 20%. We offered up a new analysis on Lululemon that maps store productivity versus inventory productivity to complement the work we recently did on Nike.