Over the past two years, clothing and electronics haven’t exactly been a big priority for shoppers, as they try to cover higher-priced groceries and gasoline. In the week ahead, results from retail chains like Macy’s Inc., Urban Outfitters Inc., TJX Cos. and Best Buy Co. will offer an update on whether consumer appetites might get any more discretionary this year.
Caution still prevails on Wall Street, despite growth in holiday-season spending. They’ve cited fluctuations in mall traffic, warmer winter weather, a struggling younger consumer and difficulties staying relevant on fashion. Expectations have been high for off-price retailers, some analysts say.
Macy’s
M,
reports results on Tuesday, amid leadership changes and shareholder drama.
The department store last month turned down a takeover bid from Arkhouse Management and Brigade Capital. However, May’s management said it was “open to opportunities” to serve shareholders, and this month, it received board nominations from Arkhouse, and the retailer may be weighing offers elsewhere. Tony Spring became Macy’s new chief executive this month, and prior to that, the company said it would cut corporate staff and close a handful of stores.
Meanwhile, TD Cowen analyst Oliver Chen, in a research note this month, said he was “cautious” on Macy’s heading into the results. He cited “challenging mall traffic trends and work-in-progress assortment for private label brands.”
Urban Outfitters
URBN,
also reports on Tuesday, as the younger customers at its namesake brand struggle with higher prices and remain somewhat uninspired by that chain’s clothing assortment. However, the company appointed a new president of the company’s North America Urban Outfitters stores, and said it got a bump in holiday-period sales.
Still, that jump was driven by its Free People and Anthropologie stores, which cater to a wealthier shopper. And Jefferies analysts in January said that “as UO’s main customer remains challenged, and the brand attempts to re-resonate with its customer base, we remain cautious ahead, as the brand attempts to return to top-line growth.”
Off-price chain TJX
TJX,
the parent of T.J. Maxx and Marshalls, reports Wednesday. With prices for basics elevated, William Blair analysts this month said TJX stood to benefit from a years-long “department store to off-price migration” amid broader challenges for department stores that try to split the difference between luxury shopping and bargain hunting.
But they also noted a year-long run higher in the company’s stock, and said many investors had been ”hiding out” in shares of off-price chains over the past two years amid the inflation storm and recession worries. Stronger results from store chains that don’t discount as much could spur those investors to flee the off-price names and chase bigger gains elsewhere, they suggested.
Then there’s demand for electronics, which has also been weak. Commentary from executives at electronics retailer Best Buy
BBY,
which reports Thursday, will arrive as some analysts say a rebound is likely, as people replace old phones, laptops and other devices.
“Later in 2024, the industry should start to benefit from the natural upgrade and replacement cycles for technology bought early during the COVID-19 pandemic,” Wedbush analysts said in a note in January.
Those retailers will report after Walmart Inc., during its earnings call last week, said that prices for general merchandise — that is, things like clothing and electronics, were lower than they were a year ago and, in some cases, two years ago. While that’s good for customers, it’s bad for retailers’ sales and profits.
This week in earnings
Elsewhere, smart-TV maker Vizio Holding Corp.
VZIO,
will report results, after Walmart said it would buy the company in an effort to serve up more digital ads to people in more places. Earnings are also due from theater chain and meme stock AMC Entertainment Holdings
AMC,
Pizza chains Domino’s Pizza Inc.
DPZ,
and Papa John’s International Inc.
PZZA,
also report. Dell Technologies Inc.
DELL,
home improvement retailer Lowe’s Cos.
LOW,
and eBay Inc.
EBAY,
also report.
The call to put on your calendar
Paramount: Entertainment and streaming giant Paramount Global
PARA,
issues results on Wednesday. Those results will come as the streaming industry pulls back from a massive spending push on programming in the prior decade, with implications for the types of shows and films that ultimately get made.
They’ll also arrive as Paramount reportedly entertains multiple M&A bids amid ongoing streaming-industry consolidation and investor agitations for profit growth. However, Barron’s this month reported that the company — which oversees Paramount Pictures, CBS and Comedy Central — will cut jobs, as it tries to cut costs and grow profits. Those cuts, Barron’s said, would come after what Chief Executive Bob Bakish called a “blockbuster” Super Bowl, which aired this month on CBS, the company’s streaming service Paramount+, and Nickelodeon.
Shares of Paramount are down over the past 12 months, and Warren Buffett’s Berkshire Hathaway Inc.
BRK.A,
recently trimmed its stake in the company. And elsewhere in the entertainment industry, rival Warner Bros. Discovery Inc.
WBD,
reported deeper-than-expected losses, including within its streaming business.
The numbers to watch
Cloud services demand: Salesforce Inc.
CRM,
Snowflake Inc.
SNOW,
Okta Inc.
OKTA,
and Workday Inc.
WDAY,
report results during the week. Taken together, the results will shed more light on employers’ tech budgets and demand for AI.
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