Two-Thirds Of Consumers Cut Spending Before Tariffs Even Hit https://t.co/gHkhwjlal4 https://t.co/gHkhwjlal4 ...

Industry Trends - Some restaurant chains are defying the consumer gloom playing out in fast food [1]

Accounting Changes & Gross Margins - Walmart's gross margins are expected to appear strong in the upcoming report due to a change in accounting methods related to tariff costs [1] - The impact of this accounting change is expected to be temporary and reverse over time [2][4] - Analysts understand the reason for the margin increase and will not project it forward, expecting it to normalize in future quarters [3][4] Consumer Spending & Retail Performance - Overall retail sales remain strong, indicating continued consumer spending [6] - Consumers are prioritizing spending on essential needs rather than discretionary wants [7] - Defensive retailers, particularly those in auto parts and grocery, are outperforming discretionary retailers [5][7][8] Defensive vs Discretionary Retailers - Defensive retailers like Dollar General, O'Reilly Auto, Walmart, Kroger, and BJ's are performing well [5][7][8] - Ulta Beauty is an outperformer in the discretionary sector due to easing competitive pressures [5][9][10] - Most defensive retailers tracked (10 out of 12) have outperformed the market year-to-date [11] - Costco, considered a defensive retailer, has underperformed the S&P 500 year-to-date, with its stock up approximately 7% [11]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Retail Sector - **Key Insights**: The retail sales data indicates a mixed performance, with a notable increase in goods spending but a decline in services spending, particularly in the restaurant sector [6][7][8]. Core Points and Arguments 1. **Consumer Spending Trends**: - Retail sales increased by 0.5% month-over-month (MoM) in July, with June's figure revised up from 0.6% to 0.9% [6]. - Auto sales rebounded by 1.6% MoM, indicating recovery from a previous dip [6]. - The control group, which excludes volatile items, also saw a 0.5% MoM increase, surpassing the consensus estimate of 0.4% [6]. 2. **Sector Performance**: - Non-store retailers (primarily online sales) showed significant strength, with sales advancing between 0.74% and 0.90% over the last three months [6]. - Conversely, restaurant spending, the only tracked services category, fell by 0.4% after a previous increase of 0.6% [6]. 3. **Outlook on Consumer Spending**: - Despite the nominal increase in goods spending, a slower growth in overall consumer spending is anticipated for the remainder of the year [7]. - Three main reasons for this expectation: - The decline in services spending, which constitutes a larger share of consumer expenditure [8]. - The volatility in goods spending due to tariff front-loading, leading to earlier stronger spending, a spring dip, and a recent recovery [8]. - Downward revisions in job growth have resulted in weaker labor income growth, which, combined with a low savings rate, suggests that consumer spending will need to decelerate [8]. Additional Important Insights - **Economic Implications**: The slowdown in consumer spending is expected to contribute to below-potential real GDP growth for the year [7]. - **Market Volatility**: The strength in online sales is noted to be particularly volatile and challenging to seasonally adjust, indicating potential risks in interpreting these trends [8]. This summary encapsulates the key findings and insights from the conference call, focusing on the retail sector's performance and the implications for consumer spending and economic growth.

Wall Street will get a close look at how US consumers are faring in the early days of President Trump’s tariff regime when top retailers report earnings next week https://t.co/3IYbOxKS8M ...

Market Trends - US stocks maintained record highs [1] - Retail sales data alleviated concerns about consumer spending [1]

LET'S CROSS TO MIKE MCKEE. GOOD MORNING. MIKE: IT LOOKS LIKE WE'VE GOT A REASONABLY GOOD BUT SLIGHTLY DISAPPOINTING RETAIL SALES NUMBER.THAT NUMBER COMES IN AT .5%. LAST MONTH WAS .5% AND THE FORECAST WAS FOR .6%. FOR AUTOS, WE ARE AT .3%, WHICH WOULD -- WHICH IS WHAT WAS FORECAST.THE CONTROL GROUP EVERYBODY CARES ABOUT, OF COURSE, IS UP .5%. SAME AS LAST MONTH. THAT WOULD BE GOOD NEWS.IT SHOWS AMERICANS ARE SPENDING. I'M SAYING GOOD NEWS AND THE MARKETS PROBABLY ARE NOT LIKING IT. IMPORT PRICES COME UP .4% ...

US retail sales rose in July in a broad-based advance, boosted by car sales and major online promotions in a sign consumers stepped up their spending in recent months. https://t.co/LZR3Atk3NM ...

London is bearing the brunt of the UK’s jobs slowdown as a combination of tax rises, elevated wage costs and weak consumer spending force the city’s business to cut payrolls faster than in the rest of the country https://t.co/TwagEt9m85 ...

Restaurant Industry Trends - Full-service restaurants are performing well as consumers still seek dining experiences [1][2] - A bifurcated economy exists where higher-end dining occasions are doing better than transactional options [2] - Consumers are shifting from fast food/quick service to sit-down meals, willing to spend a bit more for the experience [3] - People are prioritizing family/friend meals over daily transactional purchases like Starbucks or workday salads [4] Company Performance & Outlook - Chipotle faced a tough year with negative same-store sales in Q2, partly due to comparison issues and a slowdown in the fast-casual sector [5] - Despite challenges, Chipotle is viewed favorably due to its value, new store performance, and good margins [6] - Cava experienced an expectations mismatch after being considered the "Chipotle of Mediterranean," but new restaurants are performing strongly [6][7] - Cava's earnings were slightly ahead of estimates, suggesting no major issues, but the company is working through growing pains [7]