JaguarConsumer Weekly Callouts – April 21 (BOOT, CASY, FOXF, SBUX, TSCO, WHR)
Boot Barn Holdings (BOOT) – In a retail industry note recently, BTIG would highlight that “Global Google searches for the terms ‘cowboy hat,’ ‘cowboy boots,’ and ‘bolo tie’ increased 213%, 163%, and 566%, respectively, following Beyonce’s Super Bowl commercial and the subsequent debut of two singles from her new country album.” According to Trendalytics retailers are looking to capitalize on this trend, with “rhinestone cowboy hats” available for sales increasing 300% over the last 30 days, driven by fast-fashion retailers. While the ‘Beyonce Effect’ may not directly benefit Boot Barn, they still view it as a positive read for BOOT’s ability to resonate nationwide as it continues to expand its store base to 900 units (from less than 400 currently).
Separately, Piper Sandler’s recent “Taking Stock With Teens Survey” showed strong brand results for Carhartt and Ariat – two key brands for Boot Barn and Tractor Supply (TSCO). Carhartt was a major standout in Spring ’24 among Teen Males, impressively ranking in the Top 10 brands for the second time in Teen Survey history. The brand overall has seen solid, steady growth over the past several years as the workwear aesthetic has taken hold and proven itself to be a long-term trend. In 2018, Carhartt’s ranking among Male Teens ranged from the higher No. 20’s to higher No. 40’s, and since then it has slowly but steadily risen to a Top 10 spot. Meanwhile, Ariat has not kept up with Carhartt’s popularity but has also grown steadily in the ranking over the past several years. Among All Teens, Ariat retained the No. 40 spot for the Spring ’24 survey – up significantly from 2018 & 2019 when Ariat ranged from No. 70 to 100+. While Carhartt is stronger than Ariat among the Gen Z generation, results continue to reinforce the idea that workwear and utilitarian fashion is not just a fad, but an enduring trend. “As teens increasingly wear these brands, they are more likely to get introduced to the BOOT and TSCO brands as a result – which could be a long-lasting tailwind for new customer growth and incremental sales.”
Casey’s General Stores (CASY) – BMO Capital’s Monthly Food Retail Roundup provides in-depth analysis of Circana data. This has provided read-throughs for stocks under their coverage such as Kroger (KR), Albertsons (ACI), Wal-Mart (WMT), and Casey’s General Stores. As it pertains to CASY, BMO Capital would highlight that national average C-stores sales decelerated to 0.8% in the March period vs. 1.4% last period. Volume inflected negative, (0.7%) vs. 0.8% prior. Beverages and General Food grew LSD% in the month of March, compared with Liquor and Tobacco growing 0-LSD%, and Cigarette volume steady down (6%). “Our index continued to slow, which suggests some risk to our 4% Grocery & General Merchandise comp estimate.”
Fox Factory Holdings (FOXF) – This is a name that we’ve covered plenty of times in our Conversations podcasts. Our original bear case was presented on September 20th with the stock trading around $90. With the stock now at $40, there is still nothing to like based on channel checks. More specifically, Stifel was out with their mid-month upfitting checks, a proprietary dataset that covers approximately 90% of FOXF’s upfitting business dealerships with inventory.
“FOXF upfitting business recognizes revenue when a vehicle is shipped to a dealer. Sell-in is therefore the most direct indicator of volume contributions to FOXF’s upfitting business revenue growth (reported in the AAG Segment). Our data shows 397 new trucks were replenished to dealer lots between mid-March and mid-April 2024. This is down -65% Y/Y, decelerating sequentially from -60% Y/Y in the mid-February to mid-March 2024 period. For the current month, we estimate ASP was a +MSD ppt. offset to monthly volume declines. Sequentially, the 397 trucks replenished is a notable -21% decline from 502 in the prior month.”
Starbucks (SBUX) – Oppenheimer analyst Brian Bittner would start his April 19th note highlighting that over the past 12 months, shares of Starbucks are down 20% (vs the S&P’s +21%), and valuation (19.5x forward P/E) has contracted to levels that are consistent with historical troughs. Their work suggests investors are biased towards trying to find catalysts to be long at current levels, but they remain cautious following their updated analysis:
“On last earnings call, management cited “multiple paths” to achieve its 15–20% ’24E EPS outlook. However, our updated analysis identifies an elevated probability that ’24 earnings guidance could reduce to our +10% estimate (or lower) owing to softer underlying SSS trends and more difficult comparisons for store-level operating expenses. Updates to 2H24 implied guidance will be closely monitored.”
“Following our modeling exercise, we reduce ’25E EPS to $4.48 (vs. Street’s $4.67). Our updated ’25E EPS still underwrites +15% growth, and assumes SSS accelerate from our flat assumption in 2Q24 to ~3% in 2H24E and >4% in ’25E. Therefore, our below-consensus earnings model holds additional risk if management’s sales initiatives don’t quickly drive improving comp trends.”
“We reduce our EPS estimate to $0.75, below Street’s $0.81. This assumes flat North America SSS (vs. Street’s +1.7% estimate) and -1.2% for Int’l (vs. Street’s +0.4%), which aligns more closely with buy-side expectations.”
Whirlpool (WHR) – The Association of Home Appliance Manufacturers (AHAM) reported Q1 U.S. industry wholesale unit shipments of “core 6” major appliances were -6% Y/Y. Note, freezers were down massively in the quarter, while the other categories ranged from down low single-digits to down high-single digits. Drilling down to monthly detail, January shipments were -19% Y/Y, February -6%, and March +5%. That said, two-year stacked daily shipment trends were mixed as the quarter progressed. Specifically, December’s two-year stack was -5%, January +3%, February -9%, and March +1%.
Raymond James analyst Sam Darkatsh would summarize by saying that U.S. major appliance industry shipments declined mid-single digits Y/Y in Q1, similar to their prior model assumptions for Whirlpool (and they believe the company’s own internal plan). Whirlpool will be reporting their financial results on April 24th after the close. Two days later, on April 26th, peer Electrolux will also be reporting their Q1 results.