Consumer Discretionary

Report by Quo Vadis Capital

John Zolidis continues to favour discount retailers for Q2, as persistent inflation from tariffs and high gas prices is expected to outweigh any stimulus tailwinds. Within the space, he highlights Five Below as the best unit growth story in retail, while Dollar Tree offers upside from a successful multi-price transition. Dollar General is improving execution, recovering margin and driving traffic with a lot of room to go relative to previous results. Savers Value Village stands out as a mispriced growth story at <7x EBITDA. Beyond discount, Sprouts Farmers Market should see comps recover on affordability, while National Vision remains an early-stage transformation story. Rounding out the basket are Boot Barn, supported by favourable Western wear trends, and Academy Sports, a cheap, heavily shorted name with comps turning positive.

Consumer Discretionary

Report by Hedgeye

Brian McGough thinks the market is materially overestimating the company’s long-term earnings power. Investors are buying into BOOT’s ambition to expand from ~515 stores to 1,200, but Hedgeye’s M.A.P.S. (Market Area Performance Study) analysis suggests the company has already exhausted its most profitable “power alley” stores tied to mining, agriculture and construction - locations with a healthy 70/30 workwear-to-fashion mix. Incremental growth is now shifting to more expensive, fashion-heavy stores that rely on a Western Wear trend that Brian believes is in the late innings. In aggregate, he estimates BOOT needs ~7% comps just to leverage occupancy (the highest hurdle in retail), while many new stores carry rent escalators exceeding 10%. Brian sees sustainable EPS closer to ~$4 vs. consensus TAIL expectations >$8, implying up to ~75% downside.

Consumer Discretionary

Report by Paragon Intel

New CEO Jim Conroy added to Paragon’s research pipeline - Conroy joins ROST from Boot Barn, where he created 640% alpha as CEO since 2012. However, his ManagementTrack Rating of 5.7 is a modest downgrade vs. the outgoing CEO Rentler's MTR of 7.0. Other stats include: Conroy is a "Builder" capital allocator: 70% of career capital allocated towards CapEx (Rentler is a "Capital Returner", allocating 69%+ towards Dividends & Buybacks). Conroy is an "Inconsistent Guidance Forecaster": Beats 49% & Misses 39% of the time (Rentler is a "Guidance Sandbagger": Beats 87% & Misses 7%). He has a low F.L.A.G. Risk Concern and very low historical Earnings Call Q&A Evasiveness (Conroy averaged 10% vs. Rentler's 27% over the last 5 years).

Consumer Discretionary

Report by Quo Vadis Capital

Where BOOT's latest results diverged from John Zolidis’ expectations, was in the Mar quarter outlook, which was worse than expected. Despite the cut to forecasts, he is still more than $1 below the Street in EPS for the Mar 2025 fiscal year. There is also little (or no) sign of any turn in the business. Comps are deeply negative. And the company continues to try to offset the decline in demand by accelerating unit growth, shifting more of the assortment to private brands and by reducing staffing in stores. Absent a change in top-line, John continues to see risk of much lower earnings and a further negative re-rating of the shares.

Consumer Discretionary

In their weekly report A Line uses a proprietary ranking system to build individual company performance history. Companies are graded A-C based on factors including product design, promotional activity and store feedback. Biggest movers last week:

BOOT - Grade B: scores 18/30, +3pts vs. previous week. Surprisingly strong Black Friday weekend and then managed to avoid the typical post-holiday lull. Seeing a lot of success with the relatively new men’s private label brand (Brother’s & Sons).
BBWI - Grade B: scores 15/30, -3pts. Missed sales over Black Friday weekend and Candle Day. The stores have been refusing shipments because they didn’t sell enough and cannot fit anything else on the floors.