Consumer Discretionary

Report by Hedgeye

Brian McGough reiterates his bearish view on FND despite the stock’s ~50% drop since his Apr 24 short call (vs. the S&P +33%). Brian is updating his analysis using his M.A.P.S. (Market Area Performance Study) framework, which tracks store performance by opening cohort. His latest findings suggest that stores opened in 2024 & 2025 are performing even worse than earlier cohorts, reinforcing that FND’s weak comps are structural, not cyclical. New units also show rising market overlap with the likes of Home Depot and Lowe's. While FND is often seen as a housing-recovery play, Brian expects another ~30% downside as earnings, growth guidance and unit expansion continue to disappoint.

Consumer Discretionary

Report by R5 Capital

Amazon ran steep tool discounts over the holiday, highlighting Lowe’s pricing disadvantage. Across 25 items from brands like Bosch and Dewalt, Lowe’s averaged 27.5% higher prices; 15 items were cheaper on Amazon with average discounts of 34.6%, while only one was cheaper at Lowe’s. This follows R5's year-long observation that Lowe’s prices exceed Walmart’s on common goods. The wide gap raises concerns about Lowe’s gross margins and potential sales/earnings headwinds, even if housing improves. Meanwhile, Amazon’s aggressive pricing supports volume growth and advertising profits—a positive for AMZN but a structural challenge for broader retail.

Consumer Discretionary

Report by Gordon Haskett Research Advisors

GHRA sees a notable drop in both households planning to undertake a home improvement project and the size / scope of that remodel. 1Q24 survey specifics include: 1) Home improvement plans in the next twelve months moderated ~300 bps sequentially to 53.7% but dropped meaningfully Y/Y from 62.3% in 1Q23. 2) 57.3% of respondents have delayed buying a home (up from 56.0% in 4Q23 and above the long-term average of 51.1%), with 56.7% of them instead planning to reinvest / upgrade their current home (down from 64.3% in 4Q23). 3) The amount consumers are budgeting for home improvement projects moderated sequentially to a 15-quarter low of $5,851, or -24% Y/Y. 4) Home Depot maintained its market share leadership, but the gap to Lowe's narrowed to the slimmest margin yet in GHRA’s survey.

Consumer Staples

Report by Gordon Haskett Research Advisors

Building off a strong February Week 4 when COST began to cycle significantly stronger comps from a year ago, the company saw an acceleration in trends during the month of March - posting a hugely impressive 11.1% core comp. According to GHRA, it is becoming increasingly clear that COST will “stomp the comp” in the coming months. Other companies well positioned to do the same include Dollar General, Target and Lowe's.