What is the True Retail Story?
U.S. consumers drive 70% of the U.S. economy and are ultimately the economic engine of the world. So, when consumer spending is strong, it’s good for the market.
Depending on where you look, you could spin a story of an extremely strong consumer or a weakening consumer on the brink of collapse. The market has landed on the “consumer is strong” side, but I want to show a more complete — and confusing — picture.
If you look at $Wal-Mart(WMT)$ , all is well, and growth is picking up.
But remember, Walmart is the biggest discount retailer, and it does well when consumers are looking for value.
Maybe a better indication of consumer sentiment is $Target(TGT)$ ? And they’re showing weakness, including a poor quarter announced last week.
$Home Depot(HD)$ has also reported negative same-store sales comps for 7 straight quarters.
But $Costco(COST)$ is crushing it!
If we move over to the food business, Restaurant Brands International is telling us people are eating out less at Tim Horton’s, Burger King, and Popeyes.
And coffee is in freefall, according to $Starbucks(SBUX)$ .
But $Chipotle Mexican Grill(CMG)$ is crushing it, growing same-store sales by 6% last quarter and expecting continued momentum.
Is this “normalizing” shopping patterns with big spending days moving to the holidays?
Is the COVID hangover affecting comps?
Is this company-specific performance?
It’s not clear.
And to add another data point, auto loan delinquencies are rising. This one is worrying.
Is the consumer OK, as the market thinks?
Or is there trouble ahead?
The picture isn’t clear. But I’m watching the trends closely.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
