Retail Cross Currents: 4 key themes & top stock ideas
Consumer
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).
Edition: 221
- 03 October, 2025
Consumer Staples
Scott Mushkin downgrades DG to Sell, citing widening price gaps with competitors, which threaten margins and volume share gains over the next 12-18 months. R5’s latest fieldwork shows a total basket premium of 9% vs. Walmart - well above the typical 3-7% range. Scott now sees pressure from WMT starting to impact the back half of 2025; while Amazon’s push to speed up delivery times in rural areas, coupled with its low pricing for everyday essentials also appears be gaining momentum. At the same time, Dollar Tree is making inroads into DG’s core markets. Finally, regulatory risks from SNAP eligibility changes and the MAHA movement targeting sugary foods are expected to negatively impact sales.
Edition: 217
- 08 August, 2025
Consumer Staples
While there has been a lot of optimism around improvements at DG, R5’s latest spot-check of stores does not support this sentiment. Indeed, it was the opposite. They came across similar operating difficulties to those seen over the last few years. There remains a severe inventory overstock problem. Unmanned checkouts and stores only having one employee on a Saturday were also witnessed. Store standards varied, from dirty and messy, to a few being well organised and clean. Scott Mushkin also sees some structural / competitive issues at play that may hamper DG’s longer term growth algorithm even if / when operations improve.
Edition: 184
- 19 April, 2024
Consumer Staples
Gordon Haskett Research Advisors
EPS north of $10.00 is very much on the cards for FY24 - shares of TGT were up 12% post 4Q earnings and are now up ~20% since GHRA turned bullish in early Feb. In their latest note, they make the case for both earnings upside and multiple appreciation (via traffic gains and business mix diversification). To this end and within their coverage universe, TGT joins the likes of Dollar General, Dollar Tree and Dick's Sporting Goods where this dynamic could play out in the months ahead. Their TP increases to $200 and is based on ~18.5x GHRA’s 2025 EPS of $10.75.
Edition: 181
- 08 March, 2024
AI driven 10Q / 10K filings analysis
Since there are always reasons when companies change the wording in their financial filings, being alerted to these changes allows investors to realise potential risk factors and opportunities before they are reflected in the market, ideal for idea generation and portfolio monitoring. Stocks recently highlighted by 280First include Arrowhead Pharmaceuticals (ownership change / cash flow needs / Horizon license agreement), Atmos Energy (more benign competition), Dollar General (rethink capital allocation and dividends / store openings) and MACOM (increased competition / less pricing power).
Edition: 178
- 26 January, 2024
Consumer Staples
The return of Todd Vasos as CEO will not magically make all DG’s problems go away and the Walmart threat is likely to become more of an issue as WMT moves to use its productivity savings from automation / workflow initiatives to lower prices. Walmart+ is also a growing headwind as it makes the service available to more rural communities and discounts the price for lower income households. As of now, R5 has DG’s EBIT margin in the low 5% range over the next few years, yielding mid $6’s in EPS, but this could be optimistic depending on the competitive climate. Assuming a 15 PE multiple, there remains plenty of equity downside.
Edition: 172
- 27 October, 2023
Consumer Staples
Gordon Haskett Research Advisors
Chuck Grom’s recent downgrade of the stock proves timely as the share price plummets on the back of dismal earnings - it is third time in the last four quarters that DG has missed Street estimates. Taking a step back, several company specific headwinds are playing out between: (a) higher wage investments, (b) elevated store maintenance costs, and (c) pricing gap headwinds…in addition to DG suspending share repurchases while reducing capital to new stores. Chuck also thinks the risk to the basket size giving back some of the gains over the last five years (avg. basket $12 to $17) remains elevated. He lowers his FY23 EPS estimate to $9.70 and FY24 estimate to $10.30.
Edition: 162
- 09 June, 2023
Consumer Staples
Another shoe to drop - Scott Mushkin's research reveals a worrying lack of staff in stores and it is exacerbating the distribution and logistics issues that he has been documenting for about a year. Scott estimates that adding more labour hours will cost DG at least $300m and the longer this is left to fester the more damage there will be to the business. He argues that improvements must also be made around retaining quality employees (DG ranks lowest in R5’s universe on Glassdoor). Furthermore, a loss of focus on its core strengths and over-expanding is likely to hamper results. Street expectations remain too high.
Edition: 150
- 09 December, 2022
Consumer Staples
Widespread store execution and distribution challenges - Scott Mushkin downgrades the stock to Sell. He estimates that 10-15% of the store base is experiencing issues receiving consumable products, which make up over 75% of total company sales. Scott's store visits regularly found shelves to be empty, and while a lack of truck drivers is a key factor, warehouse and store staffing levels also remain suboptimal. Labour constraints along with building material scarcity will hamper store growth over at least the next several quarters. With DG’s core customer already struggling to deal with rapidly increasing costs of everyday items, Street estimates are too high.
Edition: 124
- 26 November, 2021
Dollar General (DG)
Consumer Staples
Impressive earnings beat and bullish near-term outlook, but Scott Mushkin believes the real story lies in the potential for growth to accelerate in 2022 and beyond. He sees the company moving quickly to increase the store build of pOpshelf and DGX. Scott describes pOpshelf as “the best new format he has seen in 20 years”. While DGX is a better-merchandised, lower-priced offering vs. traditional convenience stores which should gain share rapidly. DG is a must-own equity. TP $292 (42% upside).
Edition: 112
- 11 June, 2021
Costco (COST)
Consumer Staples
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.
Edition: 108
- 16 April, 2021