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Proprietary Data Insights Top Department Store Stock Searches This Month
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Where People Won’t Be Shopping This Holiday Season Source: Google Finance This holiday season, people won’t be shopping at big department stores as much as they used to. Like the ones among the most searched department store stocks in Trackstar, our proprietary sentiment indicator. Though, based on stock performance, maybe Dillard’s (DDS) stands a chance. Why is Dillard’s up and everybody else down? Probably because of these numbers:
Dillard’s beat estimates on both numbers in Q3 and raised full-year guidance. In an all-around crappy environment for big department stores, this is nothing short of stellar. The chart below shows how department store sales have fallen in the last decade. Source: Experian Don’t make too much of that post-pandemic pop in sales. They’re still below pre-pandemic levels. Way below if you go back to 2013. And there are fewer viable department store options thanks to widespread store closures and bankruptcy filings from names such as JCPenney (remember when former Apple exec Ron Johnson was supposed to save JCP!?) and Stein Mart. No matter where consumers decide to shop over the holidays, we have an idea how they’ll pay. It’s not good news. And it’s something The Juice has been sounding the alarm on for most of 2022. |
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Debt vs. Savings |
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A Consumer-Crushing Christmas?
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Key Takeaways:
Source: American Bankers Association The chart above shows outstanding credit card debt in proportion to disposable income rising steadily. And that’s only as of Q2 2022.
Add to this the holiday-shopping-related rise in consumers using buy now, pay later (BNPL) programs we detailed last month:
In BNPL player Affirm (AFRM)’s most recent quarter, which ended in September, delinquencies continued to rise across the board. For example, 30-day delinquencies – the stuff 60-day, then 90-day, then 120-day delinquencies are made of – increased 80% year over year. They hit nearly $89.5 million, up 14.7% from roughly $78 million in the prior quarter. This is all a recipe for pocketbook disaster heading into 2023 – when the bills come due – for large swaths of the population. Because… savings continue to plummet. The latest data from the Bureau of Economic Analysis shows:
It doesn’t take a rocket scientist with a minor in personal finance to read this evolving writing on the wall. Some cash-strapped consumers, struggling with inflation and running out of pandemic savings, have turned to debt to finance some or all of the following: life, discretionary spending, and holiday shopping. If the desire to get back to normal this holiday season takes prominence – even as COVID cases climb – the bottom could fall out on the most financially vulnerable households, not to mention companies such as Affirm.
The Bottom Line: This is why The Juice reiterates our love for stocks that benefit in this two-sided economy. Visa (V) and Mastercard (MA) because the more you swipe, the more they make. And discount retailers Dollar General (DG) and Dollar Tree (DLTR) because they could see continued spending on necessities and higher seasonal spending from the cash-strapped consumer we outlined today. |
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