Over the past couple of years, clothing and electronics have not been a big priority for shoppers, as they try to cover higher-priced groceries and gasoline. Next week, results from retail chains such as Macy's Inc. will be presented. and Urban Outfitters Inc. TJX Cos. and Best Buy Co. An update on whether consumer appetite may become more discretionary this year.
Caution remains prevailing on Wall Street, despite the growth in holiday spending. They cited fluctuations in mall traffic, warmer winter weather, a younger, struggling consumer, and difficulties staying relevant in fashion. Some analysts say expectations were high for off-price retailers.
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It announces its results on Tuesday, amid leadership changes and shareholder drama.
The department store last month rejected a takeover bid from Arkhouse Management and Brigade Capital. However, May's management has said it is “open to opportunities” to serve shareholders, and this month received board nominations from Arkhouse, and the retailer may be considering bids elsewhere. Tony Spring became Macy's new CEO this month, and before that, the company said it would cut its headcount and close a number of stores.
Meanwhile, TD Coin analyst Oliver Chen said in a research note this month that he was “cautious” about Messi's results orientation. He pointed to “challenging traffic trends at malls and the ongoing lineup of private brands.”
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Also reporting Tuesday, younger customers at its namesake brand are suffering from price hikes and remain somewhat uninspired by that chain's clothing range. However, the company has hired a new president for North American corporate stores Urban Outfitters, and said it had a significant increase in holiday sales.
However, this jump was driven by Free People and Anthropologie stores, which cater to more affluent shoppers. “As UO's core customer remains challenged, and the brand attempts to re-resonate with its customer base, we remain cautious going forward, as the brand attempts to return to top-line growth,” Jefferies analysts said in January.
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TJ Maxx's mother and Marshalls reports Wednesday. As prices for basics rise, TJX will benefit from a years-long “department store to off-price migration” amid broader challenges for department stores trying to split the difference between luxury shopping and bargain hunting, William Blair analysts said this month.
But they also noted a year-long rally in the company's shares, and said many investors had been “hunkering down” in the chains' out-of-price shares over the past two years amid the inflation storm and recession fears. They suggested that stronger results from store chains that don't offer deep discounts could prompt these investors to flee lower-priced names and seek bigger gains elsewhere.
Then there is demand for electronics, which has also been weak. Comment from executives at electronics retailer Best Buy BBY,
Thursday's report will come as some analysts say a rebound is likely, as people replace old phones, laptops and other devices.
“Later in 2024, the industry should begin to benefit from the natural upgrade and replacement cycles of technology purchased early during the COVID-19 pandemic,” Wedbush analysts said in a note in January.
Retailers will report after Walmart Inc said during its earnings call last week that prices for general merchandise — things like clothing and electronics — were lower than they were a year ago and, in some cases, two years ago. While this is good for customers, it is bad for retailers' sales and profits.
This week in earnings
Elsewhere, smart TV maker Vizio Holding Corp. VZIO,
It will announce the results, after Walmart said it would buy the company in an effort to bring more digital advertising to people in more places. Dividends are also due from theater chain and meme shares AMC Entertainment Holdings AMC,
Pizza chains Domino's Pizza Inc. DPZ,
Papa John's International PZZA,
Report too. Dell Technologies Inc. Dell,
Home improvement retailer Lowe's Cos. LOW,
And eBay Inc.
Report too.
Call to put it on your calendar
Basic: Entertainment and streaming giant Paramount Global PARA,
Results will be released on Wednesday. These findings will come as the streaming industry pulls back from the massive spending on programming of the previous decade, with implications for the types of shows and movies that ultimately get produced.
They will also arrive at a time when Paramount is said to be making several M&A offers amid the streaming industry's ongoing consolidation and investors' agitation for earnings growth. However, Barron's reported this month that the company — which oversees Paramount Pictures, CBS and Comedy Central — would cut jobs, as it tries to cut costs and boost profits. Barron's said those cuts would come after what CEO Bob Bakish called a “blockbuster” Super Bowl, which aired this month on CBS, the company's streaming service Paramount+, and Nickelodeon.
Paramount shares have fallen over the past 12 months, as have Warren Buffett's Berkshire Hathaway BRK.A shares.
It recently reduced its stake in the company. Elsewhere in the entertainment industry, Warner Bros. Discovery Inc. WBD,
It reported deeper-than-expected losses, including in its live streaming business.
Numbers to watch
Demand for cloud services: Salesforce Customer Relationship Management,
snowflake Snow Company,
Okta Okta Company,
and Workday Inc. WDAY,
Report results during the week. Taken together, the findings will shed more light on employers' technology budgets and demand for AI.
