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.
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