Clothing and electronics retailers reported this week amid continued caution from analysts.
Over the past two years, clothing and electronics have not been big priorities for shoppers as they try to include expensive groceries and gasoline. Over the next week, Macy’s Inc., Urban Outfitters Inc. and TJX Cos. Results from retail chains such as Best Buy Co. and Best Buy Co. will provide an update on whether consumer preferences may become more liberal this year.
Despite the rise in holiday spending, caution remains on Wall Street. They cited fluctuating mall traffic, warm winter weather, struggling young consumers and the difficulty of staying relevant for fashion. Some analysts say expectations were high for the discount retailer.
Macy’s M,
It reports results on Tuesday amid leadership changes and shareholder drama.
The department store rejected an acquisition offer from Archhouse Management and Brigade Capital last month. But May’s executives said they were “open to the door” to serve shareholders and this month received a board nomination from Arkhouse, and the retailer may be weighing offers from elsewhere. Tony Spring became the new CEO of Macy’s this month, before the company said it would cut jobs and close a small number of stores.
Meanwhile, TD Cowen analyst Oliver Chen said he was “cautious” about Macy’s results in a research note this month. He cited “challenging mall traffic trends and ongoing assortment of private label brands.”
Urban Outfitters URBN,
It also reported Tuesday that the eponymous brand’s younger customers are struggling with higher prices and are somewhat uninspired by the chain’s clothing range. But the company named a new president for its North American Urban Outfitters stores and said sales surged during the holiday season.
Still, the leap has been driven by Free People and Anthropologie stores that target affluent shoppers. And in January, analysts at Jefferies wrote, “We remain cautious going forward as UO’s key customers continue to struggle and the brand attempts to return to sales growth as it attempts to re-ignite with its customer base.” “I’m doing it,” he said.
discount chain TJX TJX,
The parent company of TJ Maxx and Marshalls reports Wednesday. As prices for basic goods rise, analysts at William Blair this month said TJX could benefit from a years-long “shift from department stores to discount pricing” amid broader challenges by department stores to split the difference between luxury shopping and bargain hunting. I said there is.
But they also pointed out that the company’s stock price had risen for a year, and said many investors had “hidden” in the low-cost chain’s stock over the past two years due to inflation storms and recession fears. Stronger results from store chains that don’t discount as much could prompt investors to shun discounted names and seek bigger gains elsewhere, they suggested.
And demand for electronics is also weak. Comments from executives at electronics retailer Best Buy BBY
That report is scheduled for Thursday, as some analysts say a rebound is likely as people replace old phones, laptops and other devices.
“In late 2024, the industry will begin to benefit from a natural upgrade and replacement cycle for technologies purchased early in the COVID-19 pandemic,” Wedbush analysts said in a January note.
These retailers are scheduled to report after Walmart said in an earnings call last week that prices for general merchandise (clothing, electronics and more) were lower than they were a year ago and, in some cases, two years ago. This is good for customers, but bad for retailers’ sales and profits.
This Week’s Earnings
Elsewhere, smart TV maker Vizio Holding Corp. VZIO,
Walmart is expected to report results after it said it would acquire the company as part of an effort to bring more digital advertising to people in more places. Revenue also comes from theater chain and meme stock AMC Entertainment Holdings AMC.
Pizza chain Domino’s Pizza Inc. DPZ,
and Papa John’s International Inc. PZZA,
Also reports: Dell Technologies (DELL);
Home improvement retailer Lowe’s Cos. LOW,
and eBay Inc. eBay,
Also reports:
A call to put on the calendar
Great: entertainment and streaming giant Paramount Global PARA;
Results will be announced on Wednesday. These results will ultimately impact the types of shows and movies that are produced as the streaming industry pulls back on the massive spending on programming it has made over the past decade.
They will also arrive as Paramount is reportedly accepting multiple M&A bids amid ongoing streaming industry consolidation and investor clamor for profit growth. But Barron’s reported this month that the company, which oversees Paramount Pictures, CBS and Comedy Central, will cut staff to cut costs and boost profits. Barron’s said the cuts would come after what CEO Bob Bakish called a “blockbuster” Super Bowl airing this month on CBS, streaming service Paramount+ and Nickelodeon.
Paramount’s shares have fallen over the past 12 months, while Warren Buffett’s Berkshire Hathaway Inc. BRK.A has fallen.
I recently reduced my stake in the company. And elsewhere in the entertainment industry, rival Warner Bros. Discovery Inc. WBD,
It reported larger-than-expected losses, including in its streaming business.
Numbers to watch out for
Cloud service demand: Salesforce CRM,
SNOW, Snowflake Co., Ltd.
Okta Co., Ltd.,
and Workday Inc. WDAY,
Results will be reported mid-week. Taken together, the results will provide more information about employers’ technology budgets and AI needs.
