The majority of second-quarter earnings season is over, with a handful of major technology and retail names left to report this week. Economists will be focused on any news from an annual gathering of monetary policy thinkers and practitioners in Jackson Hole, Wyoming.
Home Depot, Target, Cisco, Deere, Walmart, and More Stocks to Watch This Week
Are stores getting more desperate to sell sneakers? Fourth-quarter results from Nike Inc. on Thursday will probably provide part of the answer.
Even as its some of its basketball shoes still put up double-digit sales gains — like those named after NBA icons LeBron James, Luka Doncic and Giannis Antetokounmpo — the athletic-gear maker, like its rivals, has faced weaker consumer demand overall. With customers forced to spend more money on necessities over the past year, they’ve had less to spend on new shoes.
In March, Nike
NKE,
executives said that the demand backdrop remained “promotional” — one in which anyone selling sneakers and clothing was cutting prices more aggressively to attract customers. But ahead of Thursday’s results, some analysts also wondered whether the stalling demand has forced bigger changes to the way management thinks about its broader turn away from retailers — a core piece of its sales strategy.
Nike over recent years has embarked on a plan to rely less on shoe retailers for sales and more on sales made directly to customers through its own stores and online. But recently, it decided to start selling clothing again at Macy’s
M,
and shoes again at DSW, the shoe-store chain run by Designer Brands Inc.
DBI,
— this after ending partnerships with both retailers over the past two years.
The return to traditional retail has raised questions about whether Nike is looking to more aggressively clear product it’s had trouble selling, and whether management is re-evaluating the company’s go-it-alone sales strategy overall.
“The big question on our minds heading into [Nike’s] quarter is what is going on with the [direct-to-consumer] pivot?” Quo Vadis analyst John Zolidis said in a note on Monday. “Reopening Macy’s and DSW seems odd in context of previous dismissive statements about undifferentiated retail.”
He continued: “Further, neither of these retailers has a customer that correlates strongly with [Nike’s] highest-value segments. The easiest explanation is that [Nike] overestimated the dollars it could recapture from closed wholesale accounts and now has too much inventory it needs to clear.”
Earnings: Analysts polled by FactSet expect Nike to earn 68 cents a share, down from 90 cents in the same quarter a year ago. Contributors to Estimize — a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others — expect earnings per share of 75 cents.
Revenue: Analysts polled by FactSet expect $12.58 billion in sales for Nike. Forecasts from Estimize call for sales of $12.72 billion.
Stock price: Nike’s stock is only up 1.3% over the past 12 months. Shares got hit in September, after company executives warned of further price-cutting from rivals due to weaker demand. The stock rebounded later but gave up some gains in May. The stock was up 2% on Monday.
Nike in March said demand for product sold at full pricing remained solid. Still, sneaker chain Foot Locker Inc.
FL,
recently cut its outlook. Lots of Vans shoes are running at a discount, one analyst said last month, as the skater-centric brand competes with casual fare from the likes of Adidas
ADS,
and others.
Other analysts were also wondering about Nike’s return to Macy’s and DSW. But not everyone believed the move was a sign of deeper problems.
“Investors are worried that this is a reversal in Nike’s shift from wholesale to [direct-to-consumer], but we don’t think the strategy is broken,” BofA analyst Lorraine Hutchinson said in a research note on Wednesday. “We expect to hear an explanation of these moves on the [conference] call rather than an about-face on its focus on reducing undifferentiated wholesale.”
Still, the company faced concerns about sales abroad. Zolidis also said markets were increasingly worried about growth in China, whose recovery from pandemic lockdowns has stumbled.
“Our recent conversations with companies in China suggest that trends are mixed,” Zolidis said. “The consumer is more value oriented, and job uncertainty is higher.”
Costco Corp. plans to take a tougher line on the sharing of membership cards.
The bulk retailer intends to ask customers to show photo identification in addition to a Costco
COST,
membership card when going through the self-checkout process. The Dallas Morning News first reported on the development last week.
A Costco spokesperson emphasized that the company’s policy isn’t changing, as the it always required membership cards at checkout. With the rise of self checkout, however, the company has noticed non-members using cards that don’t belong to them.
“We don’t feel it’s right that non-members receive the same benefits and pricing as our members,” a Costco spokesperson said.
The company indicated on its last earnings call that it was likely to hold off on increasing its membership fees, even as an analyst suggested Costco would appear to have room for a hike.
See more: Grocery prices are still going up, but Costco membership fees aren’t — for now
“Our view right now is that we’ve got enough levers out there to drive business,” Chief Financial Officer Richard Galanti said on the earnings call, although his view is that Costco would be able to increase fees if it wanted to without meaningfully crimping renewal or signup rates.
Costco offers Gold Star and Business memberships for $60 each annually, as well as an Executive membership that costs $120. That higher tier of membership gives consumers a 2% reward on qualifying purchases from the company, among other benefits.
Costco joins Netflix Inc.
NFLX,
in clamping down on what the companies see as an abuse of membership privileges. The streaming service has moved recently to rein in account-sharing by viewers in different households, requiring either that freeloaders pay for their own accounts or that account holders pay extra to add additional viewers.
Netflix’s initiative seems to be having the desired financial effect, initial third-party data points indicate.
See also: Netflix stock rally builds as company wins cheers for password-sharing success
Read: Netflix could be looking at a ‘once-in-a-lifetime opportunity’
Bill Peters contributed.
Target Corp.’s stock is up 0.1% Friday after snapping its longest losing streak in 23 years amid an anti-LGBTQ+ backlash against the retail giant.
The stock ended Thursday’s session up 0.2% to snap the losing streak. Target
TGT,
shares had ended Wednesday’s session down 2.2%, marking their ninth consecutive decline, and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.
Target Corp.’s stock, which is on its longest losing streak in 23 years, was downgraded to neutral from overweight Thursday by JPMorgan, which cited “too many concerns rising” in relation to the retail giant.
The stock ended Wednesday’s session down 2.2%, marking its ninth straight decline and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.
Target…
Macy’s Inc.’s stock slid 9% in premarket trading Thursday, after the department-store chain posted weaker-than-expected fiscal first-quarter sales and cut its full-year guidance to reflect a challenged consumer.
The New York-based company M posted net income of $155 million, or 56 cents a share, for the quarter to April 29, down from $286 million, or 98 cents a share, in the year-earlier period. Adjusted per-share earnings were also 56 cents, ahead of the 45-cent FactSet consensus.
…
When Andrew Pessano was looking to create a state-of-the-art indoor pickleball facility in southern New Jersey and take advantage of the surging interest in the sport, he considered building it from scratch. But he and his partners realized it would take at least two years and likely cost well over $1 million.
So, Pessano and his team found a different way to achieve their goal: They leased a vacant big-box space — formerly home to a Burlington
BURL,
store, in fact — and turned it into Proshot Pickleball, a membership facility replete with eight cushioned courts, viewing decks, a pro shop and a players lounge.
Pessano says that since opening in mid-February, he’s already signed up more than 300 paid members. “The first couple of months we’re busy, busy,” he adds.
Proshot Pickleball could be something of a model for the future of what is often described as the fastest-growing sport in the country; a game that shares elements with tennis, ping-pong and badminton. In short, pickleball could soon be coming to that vacant space in your local mall — or to that abandoned big-box store. (Consider all those soon-to-be-empty Bed Bath & Beyond locations.)
“Pickleball ‘will help America’s malls to become the social hub they once were.’”
The trend is already happening: A recent retail-outlook report from JLL, a company that tracks the commercial real-estate market, points to pickleball facilities in locations ranging from a former Saks Off Fifth store in Connecticut, to a shuttered Belk department-store location in Georgia.
Pickleball “court owners are targeting malls for expansion,” says the report.
Of course, no one is saying that pickleball won’t continue to be played in parks and other public spaces, or even people’s driveways. Inherent in the game’s appeal, say fans, is that it can be played just about anywhere. But there are notable factors driving the move into malls and other retail locations.
Begin with that surging interest in pickleball. Nearly 9 million Americans are now playing the game, the Sports & Fitness Industry Association reports — an astounding year-over-year increase of 85.7%.
All those players need places to play, but the lack of available public court space in many cities and towns has led to all sorts of skirmishes, with issues arising when players use tennis facilities or take up space in playgrounds. As one parent complained about the pickleballers when the turf war erupted at a New York City playground: “It’s not a coexistence, it’s a complete and utter takeover.”
See also: As pickleball players spend billions on the sport, they run into conflicts and controversy
That leaves more room for operators of private facilities, like the pickleball court owners that JLL cites, to enter the picture — and many concepts, even chains, are starting to emerge to address the demand. But where should they go? Again, building from scratch can take a lot of money, and time.
“Nearly 9 million million Americans are now playing pickleball, the Sports & Fitness Industry Association reports — an astounding year-over-year increase of 85.7%.”
Meanwhile, mall operators and landlords of other retail spaces, such as big-box stores, are continually looking for new concepts to bring into their spaces, especially as brick-and-mortar retail stores fight to stay relevant and afloat at a time when online shopping has become the norm for many Americans.
In turn, those concepts are more often about “experiences” rather than shopping, says James Cook, a research director at JLL. Think museums, golf simulators and pickleball.
It’s about redefining the retail landscape, Cook says. “The idea is this is something new and unique,” he adds of these emerging types of mall/big-box tenants, including pickleball facilities.
Mike Leigh, author of “Zen and the Art of Pickleball,” sees an especial logic to pickleball in malls. These retails spaces are all about bringing people together, something that is all too easily forgotten in a point-and-click world of online shopping. And pickleball is a game that’s inherently social because of its close-up nature.
So the two make a natural combo, Leigh says: Pickleball “will help America’s malls to become the social hub they once were.”
CityPickle
Still, there are plenty of arguments to the contrary, so this is not a one-size-fits-all solution.
America’s malls and other retail hubs have their share of empty spaces, but the situation may not be as dire as it seems, Cook says. The points to the current retail vacancy rate of 4.2% being “at historic lows,” noting that there’s been considerable recovery since the darkest days of the pandemic.
Moreover, he says, higher-end malls are doing especially well — and it’s those spaces that tend to be a good fit for experiential concepts like pickleball. In other words, these malls may like the idea, but they aren’t necessarily begging for tenants.
Plus, Cook says pickleball facilities can need lots of space — concepts often have a food-and-drink component for pre- and post-game socializing. And facility operators like to have outdoor space, if possible, for the warmer months. Such requirements can pose challenges in a traditional mall setup, he says.
“I think [pickleball] only works in some specific instances,” he says.
Pessano, of South Jersey’s Proshot Pickleball, points to another issue: If the space’s support columns aren’t situated far enough apart from one another, it will make it difficult to have enough courts to make for a viable business. And the ceiling height can’t be too low, either, he adds.
These discouraging realities notwithstanding, it appears pickleball operators will continue to consider abandoned mall spaces and big-box stores as a good option to create much-needed court space. Take CityPickle, a private operator that already set up a pop-up facility in New York City’s Hudson Yards mixed-use development in the past year, and is looking to establish permanent court spaces in the Big Apple and elsewhere.
CityPickle founders Mary Cannon and Erica Desai say they are considering abandoned retail locations as possibilities. They like the open space these places provide, and they say that landlords appreciate having tenants that bring the kind of buzz and energy that a pickleball facility offers.
“It makes so much sense,” says Cannon.
Shares of Target Corp. seesawed to a gain early Wednesday, after the discount retailer reported fiscal first-quarter results that beat expectations and reiterated its full-year outlook, but provided a downbeat second-quarter profit view due to “softening sales trends.”
Net income for the quarter to April 29 fell to $950 million, or $2.05 a share, from $1.01 billion, or $2.16 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share fell to $2.05 from $2.19 but beat the FactSet consensus of $1.77.
Total revenue increased 0.6% to $25.32 billion, above the FactSet consensus of $25.26 billion, while same-store sales grew 0.7% to exceed the FactSet consensus for a 0.2% rise, as traffic rose 0.9%.
The stock rose 0.9% in premarket trading, but has swung from a loss of as much as 3.6% to a gain of as much as 2.4% after the results were reported.
“We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests,” said Chief Executive Officer Brian Cornell. “It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now.”
Cost of sales declined 0.4% to $18.39 billion, as gross margin improved to 27.4% from 26.7%.
The value of inventory fell 6.5% from the sequential fourth quarter, and dropped 16.4% from a year ago, to $12.62 billion as of April 29.
“[W]e now expect shrink will reduce this year’s profitability by more than $500 million compared with last year,” said CEO Cornell. “While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue.
Looking ahead, Target said it was planning for a wide range of sales outcomes, given “softening sales trends” in the first quarter.
For the second quarter, the company expects same-store sales to be down in the low-single digit percentage range, compared with the FactSet consensus for a 0.1% increase. And adjusted EPS for the current quarter is expected to be $1.30 to $1.70, below expectations of $1.95.
For the full year, Target reiterated its guidance for same-store sales growth of 0.7% and for adjusted EPS of $7.75 to $8.75. That compares with the FactSet consensus for same-store sales growth of 0.6% and for adjusted EPS of $8.36.
The stock has gained 5.3% year to date through Tuesday, while the Consumer Discretionary Select Sector SPDR exchange-traded fund
XLY,
has run up 14.1% and the S&P 500 index
SPX,
has advanced 7.0%.
Walmart, Alibaba, Target, and More Stocks to Watch This Week
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https://www.barrons.com/articles/stock-market-movers-88cae2de
Stock futures fluctuated Tuesday following a mixed session on Wall Street that saw the
Dow Jones Industrial Average
and
S&P 500
rise after a spike in oil prices.
These stocks were poised to make moves Tuesday:
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Craig Barritt/Getty Images for Nordstrom
If
Nordstrom’s
latest sales update is anything to go by, high-income shoppers are finally starting to feel the pinch of a slowing economy.
The luxury department store, whose product lineup is aimed mainly at wealthier people, said late on Thursday that holiday sales were softer than hoped. It is the latest retailer to warn that consumers took a more cautious approach to holiday shopping in 2022.
“The holiday season was highly promotional, and sales were softer than prepandemic levels,” said CEO Erik Nordstrom in a news release late Thursday. “While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment.”
Shares of Nordstrom (ticker:
JWN
) were largely unchanged in early Friday trading, with a gain of 0.1% to $17.47.
The company also updated its financial forecasts for fiscal 2022, the 12 months ending January 2023. It now expects revenue growth to be at the low end of the range of 5% to 7% it had forecast. Holiday sales fell by 3.5% in 2022, driven by a 7.6% decline in the company’ Nordstrom Rack banner and a 1.7% decrease in core Nordstrom sales.
Nordstrom also said that the need to sell off outdated inventory weighed heavily on profit and margins. Adjusted earnings per share will range between $1.50 and $1.70, compared with the company’s prior call for $2.30 to $2.60. The consensus call among analysts surveyed by FactSet was for earnings to land at $1.81 for fiscal 2022.
Adjusted earnings before interest and taxes margin will be 3.1% to 3.3%, compared with the 4.3% to 4.7% management had predicted.
While costly to the bottom line, discounting heavily during the holiday season may actually be better for Nordstrom in the long run. The company expects year-end inventory levels to be down by a double-digit percentage compared with last year, putting them roughly at 2019 levels.
“We believe this reduction, coupled with cleaner inventory (~flat to 2019), may actually have been better than feared,” wrote BMO Capital Markets analyst Simon Siegel in a research note. Siegel maintained a Market Perform rating and trimmed his target for the stock price to $20 from $23.
Still, it isn’t an easy time to be a department store. Nordstrom’s announcement comes weeks after
Macy’s
provided investors with a similar update, saying sales would come in at the low to middle end of the range it had forecast as a result of unexpected lulls in demand outside of the peak shopping weekends.
On Wednesday, the Census Bureau reported that department stores’ retail sales fell by 6.6% in December from November, and were down 0.6% from December 2021.
Analysts have also expressed concern about what Nordstrom’s guidance means for demand from high-end consumers, whose buying has remained fairly resilient despite macroeconomic challenges.
For
Piper Sandler
‘s Edward Yruma, who the revision indicates that high-income shoppers may be “undergoing a cyclical slowdown,” driven by layoffs in white-collar industries, a volatile stock market, and a weak housing market. He maintained a Neutral rating on the stock.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
It may not have been a surprise to see the consumer discretionary sector of the S&P 500 get hammered last year amid talk of a looming recession while the Federal Reserve jacked up interest rates to push back against inflation.
But the stock market always looks ahead. Following a decline of 19.4% for the S&P 500
SPX,
in 2022 and a 37.6% drop for the benchmark index’s consumer discretionary sector, this may be the time to begin looking for bargains.
And now, analysts at Jefferies have lifted the sector to a “bullish” rating.
In a note to clients on Jan. 10, Jefferies’ global equity strategist, Sean Darby, wrote: “A Goldilocks scenario might be unfolding for the U.S. consumer — falling inflation but steady employment conditions.”
He sees consumer confidence improving, in part because “households are still sitting on [about] $1.4 trillion of Covid savings.”
Darby pointed to a list of 18 consumer discretionary stocks favored by Jefferies analysts that was published on Jan. 6. Those are listed below, along with three stocks in the sector the analysts rate “underperform.”
The ratings of the Jefferies analysts for individual stocks is based on their 12-month outlooks for the companies, in keeping with Wall Street tradition.
So we have added another list further down, showing which companies in the S&P 500 consumer discretionary sector are expected by analysts polled by FactSet to increase sales the most through 2024.
Here are the 18 consumer discretionary stocks recommended by Jefferies analysts with “buy” ratings on Jan. 6, sorted by how much upside the firm sees for the shares from closing prices on Jan. 9:
| Company | Ticker | Jan. 9 price | Jefferies price target | Implied 12-month upside potential | Three-year estimated sales CAGR through 2022 | Two-year estimated sales CAGR through 2024 |
| Topgolf Callaway Brands Corp. |
MODG, |
$20.76 | $56 | 170% | 32.8% | 10.0% |
| Bloomin’ Brands Inc. |
BLMN, |
$22.08 | $35 | 59% | 2.4% | 3.7% |
| Coty Inc. Class A |
COTY, |
$9.38 | $14 | 49% | -7.1% | 3.7% |
| MGM Resorts International |
MGM, |
$37.64 | $56 | 49% | -0.1% | 6.6% |
| Chewy Inc. Class A |
CHWY, |
$40.13 | $57 | 42% | 28.0% | 10.6% |
| Planet Fitness Inc. Class A |
PLNT, |
$82.36 | $115 | 40% | 10.4% | 13.9% |
| Molson Coors Beverage Co. Class B |
TAP, |
$50.21 | $69 | 37% | 0.5% | 1.4% |
| Fox Factory Holding Corp. |
FOXF, |
$99.90 | $135 | 35% | 28.1% | 6.6% |
| Hasbro Inc. |
HAS, |
$63.70 | $85 | 33% | 9.1% | 3.6% |
| Hostess Brands Inc. Class A |
TWNK, |
$23.10 | $30 | 30% | 14.2% | 5.0% |
| Lowe’s Cos. Inc. |
LOW, |
$199.44 | $250 | 25% | 10.6% | -1.9% |
| Walmart Inc. |
WMT, |
$144.95 | $175 | 21% | 4.9% | 3.3% |
| Dollar General Corp. |
DG, |
$241.05 | $285 | 18% | 10.9% | 6.7% |
| Church & Dwight Co. Inc. |
CHD, |
$82.25 | $97 | 18% | 7.0% | 4.6% |
| McDonald’s Corp. |
MCD, |
$267.25 | $315 | 18% | 2.4% | 4.0% |
| Estee Lauder Cos. Inc. Class A |
EL, |
$261.63 | $304 | 16% | 2.8% | 5.8% |
| Mondelez International Inc. Class A |
MDLZ, |
$67.24 | $75 | 12% | 6.3% | 4.1% |
| Tapestry Inc. |
TPR, |
$41.25 | $45 | 9% | 3.3% | 3.2% |
| Sources: Jefferies, FactSet | ||||||
Click on the tickers for more information about the companies.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
The two right-most columns on the table show estimated compound annual growth rates (CAGR) for the companies over the past three calendar years and expected sales CAGR for two years through calendar 2024, based on the companies’ financial reports and consensus estimates among analysts polled by FactSet.
(We used calendar-year numbers, some of which are estimated by FactSet for prior years, because some companies have fiscal years or even months that don’t match the calendar.)
The stock pick with the highest 12-month upside potential, based on Jefferies’ price target, is Topgolf Callaway Brands Corp.
MODG,
This company has the highest estimated three-year sales CAGR on the list, and has the third-highest projected sales CAGR through 2024, after Planet Fitness Inc.
PLNT,
and Chewy Inc.
CHWY,
On Jan. 6, the Jefferies analysts also listed three stocks in the sector they rated “underperform.” Here they are, sorted by how much the analysts expect the stocks to decline over the next 12 months:
| Company | Ticker | Jan. 9 price | Jefferies price target | Implied 12-month upside potential | Three-year estimated sales CAGR through 2022 | Two-year estimated sales CAGR through 2024 |
| Lululemon Athletica Inc. |
LULU, |
$298.66 | $200 | -33% | 26.3% | 14.6% |
| Williams-Sonoma Inc. |
WSM, |
$122.17 | $98 | -20% | 14.1% | -0.3% |
| Harley-Davidson Inc. |
HOG, |
$43.25 | $39 | -10% | -2.8% | 4.4% |
| Sources: Jefferies, FactSet | ||||||
A look head at which companies are expected to increase sales the most over the next two years might serve as a good starting point for your own research.
Bear in mind that some of the companies in travel-related industries suffered declining sales for three years through 2022 because of the coronavirus pandemic. Some of those are on this new list of 20 stocks in the S&P 500 consumer discretionary sector expected to show the highest two-year sales CAGR through calendar 2024:
| Company | Ticker | Two-year estimated sales CAGR through 2024 | Three-year estimated sales CAGR through 2022 | Share “buy” ratings | Jan. 9 price | Consensus price target | Implied 12-month upside potential |
| Las Vegas Sands Corp. |
LVS, |
59.2% | -32.6% | 79% | $52.78 | $53.53 | 1% |
| Norwegian Cruise Line Holdings Ltd. |
NCLH, |
39.6% | -9.3% | 44% | $13.78 | $16.96 | 23% |
| Carnival Corp. |
CCL, |
35.2% | -14.7% | 30% | $9.47 | $10.11 | 7% |
| Tesla Inc. |
TSLA, |
34.3% | 49.7% | 64% | $119.77 | $232.43 | 94% |
| Wynn Resorts Ltd. |
WYNN, |
29.3% | -17.5% | 53% | $94.33 | $96.07 | 2% |
| Royal Caribbean Group |
RCL, |
28.4% | -6.8% | 53% | $57.29 | $66.43 | 16% |
| Chipotle Mexican Grill Inc. |
CMG, |
13.4% | 15.9% | 71% | $1,446.74 | $1,778.81 | 23% |
| Amazon.com Inc. |
AMZN, |
12.2% | 22.1% | 92% | $87.36 | $133.76 | 53% |
| Booking Holdings Inc. |
BKNG, |
11.9% | 3.9% | 63% | $2,208.41 | $2,307.67 | 4% |
| Aptiv PLC |
APTV, |
11.9% | 6.4% | 70% | $97.98 | $117.23 | 20% |
| Starbucks Corp. |
SBUX, |
11.2% | 7.2% | 42% | $104.74 | $103.44 | -1% |
| Etsy Inc. |
ETSY, |
11.1% | 45.3% | 50% | $120.99 | $124.04 | 3% |
| Hilton Worldwide Holdings Inc. |
HLT, |
10.1% | -2.9% | 38% | $129.08 | $146.17 | 13% |
| Expedia Group Inc. |
EXPE, |
9.0% | -0.9% | 50% | $93.77 | $125.65 | 34% |
| NIKE Inc. Class B |
NKE, |
8.1% | 5.8% | 62% | $124.85 | $126.15 | 1% |
| Marriott International Inc. Class A |
MAR, |
7.5% | -1.2% | 30% | $152.53 | $172.81 | 13% |
| BorgWarner Inc. |
BWA, |
7.1% | 15.3% | 53% | $42.24 | $46.93 | 11% |
| Tractor Supply Co. |
TSCO, |
6.8% | 19.0% | 61% | $217.48 | $232.34 | 7% |
| Yum! Brands Inc. |
YUM, |
6.7% | 6.4% | 47% | $129.76 | $137.79 | 6% |
| Dollar General Corp. |
DG, |
6.7% | 10.9% | 67% | $241.05 | $267.54 | 11% |
| Source: FactSet | |||||||
Among the companies on this list that didn’t suffer sales declines from 2019 levels, Tesla Inc.
TSLA,
is expected to achieve the highest two-year sales CAGR through 2022.
Dollar General Corp.
DG,
is the only company to appear on this list based on consensus sales growth estimates and the Jefferies recommended list.
Don’t miss: These 15 Dividend Aristocrat stocks have been the best income builders
Shares of department-store chain Macy’s Inc. slid 8% in after-hours trading on Friday after the retailer gave a more downbeat forecast on its fourth-quarter sales, with management citing big “lulls” in the holiday-shopping season and saying customers would likely feel the squeeze from inflation into next year.
Executives said they expected those sales to land in the “low-end to mid-point” of prior expectations for between $8.161 billion to $8.401 billion. They said they expected adjusted earnings per share to be within its previously forecast range of $1.47 to $1.67.
“Black Friday/Cyber Monday sales were in line with our expectations, while the week leading up to and following Christmas were ahead,” Macy’s
M,
Chief Executive Jeff Gennette said in a statement. “However, the lulls of the non-peak holiday weeks were deeper than anticipated.”
“Based on current macro-economic indicators and our proprietary credit card data,” he continued, “we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly.”
Macy’s issued the sales and profit figures as Wall Street parses consumer behavior during the holiday season. Adobe on Thursday said online sales surpassed $210 billion and beat expectations. Costco Wholesale Corp., a day earlier, reported an increase in December sales, even though online sales fell.
Costco Wholesale Corp. shares ticked higher in the extended session Thursday after the warehouse club reported a rise in holiday sales from a year ago, even as online sales pulled back.
Costco
COST,
said December sales rose 7% to $23.8 billion, up from $22.24 billion a year ago.
For the 18 weeks ending Jan. 1, sales rose 7.6% to $81.16 billion, up from $76.34 billion in the year-ago period.
While same-store sales grew for each period, e-commerce sales declined. Total company same-store sales rose 5.5% for the month and 6.1% for the 18 weeks ending Jan. 1., while e-commerce sales declined 6.4% and 4.8%, respectively.
Costco shares rose more than 2% after hours, following a 1.4% decline to close the regular session at $450.19.
Restaurants are set to become the biggest winners of a holiday season that could turn out to be the most normalized since the onset of the pandemic.
That’s according to a new Mastercard SpendingPulse survey released on Monday, which showed spending at dining establishments surging 15.1% over the 2021 holiday period. Total retail expenditures for the Nov. 1–to–Dec. 24 period in 2022 rose 7.6%, with in-store spending up 6.8% and online spending up 10.6%.
Restaurant spending beat out several other categories, such as apparel, where spending was up 4.4% from 2021, and electronics and jewelry, where a respective 5.3% and 5.4% less were spent, and department stores, which saw spending rise 1%.
“This holiday retail season looked different than years past,” said Steve Sadove, senior adviser for Mastercard and former CEO and chairman of Saks Inc. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings postpandemic.”
Government data for November showed consumer spending was up just 0.1%, reflecting cautiousness among households and price cutting by retailers to lure those hesitant shoppers in. But the data also showed more spending on holiday recreation and travel, expected to go in the books as a busy season even if deadly winter storm may have wreaked havoc on the plans of many Americans over the Christmas weekend.
Of course, even as some merrymakers felt confident enough to make more plans and see more friends and family this year, the virus of course continues to cause illness and death. The U.S. reported 70,000 newly diagnosed cases for the first time since September on Thursday, while 422 people died of COVID-19 on Wednesday.
Don’t miss: As COVID cases rise, how to steer clear of viruses during the holiday season
Also see: 4 tips for staying healthy while traveling during this ‘tripledemic’ cold and flu season
The Mastercard SpendingPulse data measure in-store and online retail sales for all payment forms and are not inflation-adjusted.
As for the companies that might be benefiting from that increased traffic, the year-end cheer probably won’t be enough to make a dent in what has been a difficult year with would-be consumers juggling worries over inflation, rising interest rates and a war in Europe.
The Invesco Dynamic Leisure & Entertainment exchange-traded fund
PEJ,
whose holdings include Chipotle Mexican Grill
CMG,
McDonald’s
MCD,
and First Watch Restaurant Group
FWRG,
has gained 6.5% to date in the fourth quarter and is down 20% for the year as of Thursday. The broad benchmark S&P 500
SPX,
is poised for a nearly 20% loss in 2022.
Read: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter
And: Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices
CHESAPEAKE, Va. (AP) — A Walmart manager opened fire on fellow employees in the break room of a Virginia store, killing six people in the country’s second high-profile mass shooting in four days, police and a witness said Wednesday.
The gunman, who apparently shot himself, was dead when police found him, Chesapeake Police Chief Mark G. Solesky said. There was no clear motive for the shooting, which also put four people in the hospital.
The store was busy just before the attack Tuesday night as people stocked up ahead of the Thanksgiving holiday, a shopper told a local TV station.
Employee Briana Tyler said workers had gathered in the break room as they typically did ahead of their shifts. “I looked up, and my manager just opened the door and he just opened fire,” she told ABC’s “Good Morning America,” adding that “multiple people” dropped to the floor.
“He didn’t say a word,” she said. “He didn’t say anything at all.”
Solesky confirmed that the shooter, who used a pistol, was a Walmart employee but did not give his name because his family had not been notified. The police chief could not confirm whether the victims were all employees.
Employee Jessie Wilczewski told Norfolk television station WAVY that she hid under the table and the shooter looked at her with his gun pointed at her, told her to go home and she left.
“It didn’t even look real until you could feel the … ‘pow-pow-pow,’ you can feel it,” Wilczewski said. “I couldn’t hear it at first because I guess it was so loud, I could feel it.”
President Joe Biden in a statement said he and first lady Jill Biden “grieve for the family, for the Chesapeake community and for the Commonwealth of Virginia.”
Gov. Glenn Youngkin tweeted that he was in contact with law-enforcement officials in Chesapeake, Virginia’s second largest city, which lies next to the seaside communities of Norfolk and Virginia Beach.
“Our hearts break with the community of Chesapeake this morning,” Youngkin wrote. “Heinous acts of violence have no place in our communities.”
It was the second time in a little more than a week that Virginia has experienced a major shooting. Three University of Virginia football players were fatally shot on a charter bus as they returned to campus from a field trip on Nov. 13. Two other students were wounded.
“I am devastated by the senseless act of violence that took place late last night in our city,” Mayor Rick W. West said in a statement posted on the city’s Twitter account Wednesday. “Chesapeake is a tight-knit community, and we are all shaken by this news.”
A database run by the Associated Press, USA Today and Northeastern University that tracks every mass killing in America going back to 2006 shows this year has been especially violent.
The U.S. has now had 40 mass killings so far in 2022, compared with 45 for all of 2019. The database defines a mass killing as at least four people killed, not including the killer.
The attack at the Walmart came three days after a person opened fire at a gay nightclub in Colorado, killing five people and wounding 17. Last spring, the country was shaken by the deaths of 21 when a gunman stormed an elementary school in Uvalde, Texas.
Tuesday night’s shooting also brought back memories of another at a Walmart in 2019, when a gunman who targeted Mexicans opened fire at a store in El Paso, Texas, and killed 22 people.
A 911 call about the shooting came in just after 10 p.m. Solesky did not know how many shoppers were inside, whether the gunman was working or whether a security guard was present.
Joetta Jeffery told CNN that she received text messages from her mother who was inside the store when the shots were fired. Her mother, Betsy Umphlett, was not injured.
“I’m crying, I’m shaking,” Jeffery said. “I had just talked to her about buying turkeys for Thanksgiving, then this text came in.”
One man was seen wailing at a hospital after learning that his brother was dead, and others shrieked as they left a conference center set up as a family reunification center, The Virginian-Pilot reported.
Camille Buggs, a former Walmart employee, told the newspaper she went to the conference center seeking information about her former co-workers. “You always say you don’t think it would happen in your town, in your neighborhood, in your store — in your favorite store, and that’s the thing that has me shocked,” Buggs said.
Walmart
WMT,
tweeted early Wednesday that it was “shocked at this tragic event.”
In the aftermath of the El Paso shooting, Walmart made a decision in September 2019 to discontinue sales of certain kinds of ammunition and asked that customers no longer openly carry firearms in its stores.
It stopped selling handgun ammunition as well as short-barrel rifle ammunition, such as the .223 caliber and 5.56 caliber used in military style weapons. Walmart also discontinued handgun sales in Alaska.
The company had stopped selling handguns in the mid-1990s in every state but Alaska. The latest move marked its complete exit from that business and allowed it to focus on hunting rifles and related ammunition only.
Many of its stores are in rural areas where hunters depend on Walmart to get their equipment.
The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?
A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
DELL,
and HP Inc.
HPQ,
along with videoconferencing platform Zoom Video Communications Inc.
ZM,
and electronics chain Best Buy Co Inc.
BBY,
All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.
PC shipments have fallen at rates not seen since at least the 1990s. Adobe
ADBE,
has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases.
In-depth: The pandemic PC boom is over, but its legacy will live on
However, results from Target
TGT,
on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
WMT,
were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook.
Among smaller retailers, discounter Ross Stores Inc.
ROST,
hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
WSM,
noted “macro uncertainty” and “increasingly inconsistent” demand.
The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
SPX,
companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead.
But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines.
FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter.
Previously: Executives seem pretty convinced a recession is coming
Elsewhere on Monday, J.M. Smucker Co.
SJM,
— best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
A,
report results on Monday as well. Fast-food chain Jack in the Box Inc.
JACK,
reports Tuesday. Tractor and construction-vehicle Deere & Co.
DE,
reports Wednesday, following production and supply-chain snarls but steady demand.
Clothing demand, discount demand: Urban Outfitters Inc.
URBN,
reports Monday, while Burlington Stores Inc.
BURL,
Nordstrom Inc.
JWN,
and dollar-store chain Dollar Tree Inc.
DLTR,
report on Tuesday.
The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”
Off-price clothing and home-goods retailer Burlington, meanwhile, will report after rival discounters Ross and TJX received a lift from investors this week.
Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge.
Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results.
Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as calendar and email functions — to appeal to small business and adapt to a hybrid-work world.
The PC boom’s demise hit home at Dell during its prior quarter, reported in August, after personal-computer sales at the company came in below estimates. Executives, at that time, said PC demand had fallen and that “customers are taking a more cautious view of their needs given the uncertainty.”
Opinion: Tech earnings are about to dive, and there’s no life preserver in sight
Some analysts, however, signaled that some degree of investor pessimism was already baked into the stock prices.
“We recognize the deteriorating industry fundamentals in relation to PCs as well as incremental slowdown in IT Infrastructure. That said, we believe the magnitude of the cuts last quarter set up Dell to be less exposed to another round of material earnings revisions,” JPMorgan analysts said in a note. And even as HP feels similar pain, analysts there said share buybacks could be “a bright spot.”
Results from HP and Dell could also have implications for Best Buy, which sells laptops, TVs, phones and other electronic devices.
“Recall that initial expectations for the year were that BBY would face pressure as it lapped stimulus-fueled spending and broad-based demand for technology products and services,” Wedbush analysts said in a note on Friday.
“However, the macro has been more volatile than expected with consumers facing significant inflationary pressures and lower-income households are making decisions to trade down in some categories such as televisions.”