Consumer

Report by Gordon Haskett Research Advisors

GHRA highlights an unusually volatile retail backdrop through late 2025 and early 2026, noting multiple “cross currents” affecting both consumers and retailers. Recent rating changes include downgrades for Dollar Tree (Reduce) and BJ's Wholesale Club (Hold), while upgrades cover Williams-Sonoma (Buy), Wayfair (Accumulate), Kohl's (Accumulate) and Dick's Sporting Goods (Hold). GHRA’s key investment themes emphasise: 1) stocks offering both EPS upside and multiple expansion (Five Below, Ross Stores, Burlington); 2) underappreciated turnaround stories (Kohl's, Dollar General); 3) selective “rate-trade” exposure favouring home furnishings over home improvement (Williams-Sonoma, Wayfair, Tractor Supply); and 4) secular winners / “Coffee Can” stocks (Walmart, Costco, TJX, Ollie's Bargain Outlet, Casey's).

Consumer Discretionary

Report by Gordon Haskett Research Advisors

Chuck Grom upgrades WSM to Buy, forecasting a Q2 sales rebound (+3% SSS) that could mark the start of a multi-year furniture industry recovery. Pent-up demand (particularly among higher-income consumers), easing macro headwinds (tariffs, remodelling slowdown, etc.) and increase in the SALT cap, are all expected to benefit WSM. The company’s strategic move away from heavy promotional activity over the past two years also gives WSM more pricing power in a sector that is likely to see price augmentation. Emerging brands and a growing B2B channel offer longer-term growth optionality. Chuck raises his FY25 and FY26 EPS estimates to $8.75 and $9.40, both above consensus.

Report by The Retail Tracker

Target (TGT) - product improvements continue; stronger value message positions TGT for a better year ahead.
Gap (GPS) - key brands Gap & Old Navy building momentum; while the new CEO is expected to have a positive impact.
Nike (NKE) - lower expectations off Nov Qtr impacted the stock, but adding back retailers allows for EPS acceleration throughout 2024.
Williams-Sonoma (WSM) - the stock is at an all-time high; sees a mismatch between expectations and earnings performance.
Kohl's (KSS) - continues to struggle with its business, yet the stock has traded up with peers, look for share weakness on 4Q results.
VF Corp (VFC) - not convinced the company can turn it around after a tough 2023 as it looks to trim its portfolio of brands.

Consumer Discretionary

Report by The Retail Tracker

Brands with good momentum include Lululemon, Abercrombie, Chico’s, Steve Madden, LVMH, Prada, Ralph Lauren and Macy’s. According to The Retail Tracker, these retailers are entering the back half of the year with the consumer on their side and good assortments. In the improvement lane, they highlight Gap, Target, American Eagle, Bath & Body Works and Nike. They also like the risk:reward in two currently out of favour names - Williams-Sonoma (a high-quality company, with exceptional brands / leadership) and Victoria's Secret (left for dead / trades at a steep discount).

Consumer Discretionary

Report by Gordon Haskett Research Advisors

A must own name. Expectations were high heading into WSM’s Q121 print - it smashed these expectations, delivering total comp growth of 40.4% with EBIT margin of 15.9% (+950bps). Importantly, results included a much needed 'X-Factor' as management raised FY guidance (which incl. YoY revenue growth in each Qtr.) and LT guidance. There is more than enough evidence that spending on the home area will remain elevated well into 2022, which when coupled with Sonoma's less promotional model and occupancy cost reduction efforts should translate into material earnings upside in the coming quarters.