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).

- 03 October, 2025

Beauty retail disruption

Consumer Discretionary

Real Street Retail Research

Ulta share losses accelerate as Sephora, TJX and Amazon are set up to win in US Beauty this fall / holiday. Q2 was a bloodbath at Ulta with historical promotional levels and muted traffic vs. Sephora. Amazon Prime Day highlighted new, exclusive product and the migration of prestige & luxury brands. TJX's core beauty presence continues to ramp up as holiday approaches. At the current level of execution, H2 appears bleaker than guidance.

- 09 August, 2024

Estee Lauder (EL)

Consumer Staples

Real Street Retail Research

North American sales trends are increasingly disconnected from the US Beauty market. As inventory mounts in TJX & Costco and once forbidden discounts ramp up on DTC sites and department stores, the prospect of a meaningful turnaround in the medium term is in question. Distribution expansion at Ulta Beauty, Ulta @ Target and Sephora @ Kohl's, has not slowed the share bleed and a new generation of prestige brands has traction in the market. The outlook for this once dominant portfolio of legacy brands in the US is murky at best as the critical Holiday '23 season approaches.

- 15 September, 2023

Ross Stores (ROST)

Consumer Discretionary

Gordon Haskett Research Advisors

Time to add more Off-Price Retail exposure - while Chuck Grom turned incrementally more positive on the OPR space when he recently upgraded TJX to Buy, he has been waiting for more “evidence” that middle-income shoppers would begin to trade down, while simultaneously looking for proof that inventory levels would improve. Commentary from Walmart, Target and Kohl’s suggests that this trade down is now occurring, while most retailers have made commendable progress since 2Q on the inventory front. As a result, Chuck upgrades ROST to Buy and increases his EPS estimates for FY22 to $4.30 and FY23 to $5.40.

- 25 November, 2022

Broadlines & Hardlines Retail: Inventory review

Consumer Discretionary

Gordon Haskett Research Advisors

Across GHRA’s coverage inventory grew ~35% y/y on average in 1Q (or ~$40bn in aggregate) vs. average sales growth of just 3.5%, with the inventory/sales spread widening to ~31.5% (from 4.5% in 4Q). Another disappointing update from Target will further raise fears that retailers are over inventoried and gross margins will face increasing downside risk. This inventory overhang will take time to work through, but off-price retailers TJX and Burlington are well placed to benefit as it will create attractive closeout opportunities that could drive upside to 2H22 estimates.

- 10 June, 2022

Consumer: The recovery engine is reigniting as Covid threats once again wane

Consumer Discretionary

JJK Research Associates

JJK looks for the consumer’s appetite to renew normal living to support upside across PVH, Victoria's Secret, TJX and Ulta Beauty. Demand driven by a return to work, social activities and travel should fuel continued demand strength for apparel, accessories and beauty. With strong evidence from the luxury players including LVMH and Capri Holdings, JJK expects the consumer’s strong demand for these categories to be sustained, with little resistance to elevated pricing.

- 04 February, 2022

These retailers are primed for growth in 2022

Consumer Discretionary

JJK Research Associates

Consumer stocks are climbing the wall of worry reflecting supply chain challenges, higher distribution expense, rising prices and tough comps. Hence, there is limited visibility on the consumer sector delivering yoy F22 earnings gains. JJK highlight a select few who are well positioned for growth, including the value focused off-price retailers (TJX, Burlington, Ross) and beauty leaders (Bath & Body Works, Estee Lauder, Ulta). Upgraded growth strategies and Europe’s emerging rebound should also drive strong upside at A&F, Capri Holdings, Lululemon, PVH, Ralph Lauren and Victoria’s Secret.

- 01 October, 2021