Consumer Discretionary

Costco Not Raising Membership Fees Yet

/ / Consumer Discretionary /

Replying to the first question on an earnings call, outgoing CFO Richard Galanti tells analysts that the retailer isn’t prepared to announce an increase in membership fees. Investors have been watching whether Costco would boost its fees in a bid to capture additional revenue. Renewal rates increased in 2Q from 1Q and overall membership grew year over year. Walmart’s Sam’s Club raised its membership fees in 2022. “We will at some point,” says Galanti, who will be replaced by former Kroger CFO Gary Millerchip on March 15. “I’ve been joking with Gary, it will be on his watch, not mine.”

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Warner Bros. Discovery In Talks for More Streaming Bundles

/ / Consumer Discretionary /

Warner Bros. Discovery is talking with potential partners about new streaming bundles. JB Perrette, CEO of global streaming and games, says at the Morgan Stanley Technology, Media & Telecom Conference that the company is “in conversation with others” about making a similar offering to its bundle with Verizon and Netflix. Warner Bros. Discovery executives have previously hinted at a big role for streaming bundles in the future, potentially with intermediaries such as Roku or directly with other services. “We think there’s more opportunity, particularly in that lower-priced SKU, to drive penetration, Perrette says.

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Ross Stores Better-Than-Expected Fiscal Q4 Due to Topline, GM Outperformance, Morgan Stanley Says

/ / Consumer Discretionary /

Ross Stores (ROST) better-than-expected fiscal Q4 earnings were due to topline and GM outperformance, Morgan Stanley said in a note to clients Wednesday. The EPS beat was partially offset by rising selling, general and administrative costs, however, the report added. Highlights of the quarter included underlying sales growth, current apparel category underperformance, fiscal Q4 GM reaching the highest level since 2017, and reducing the gap to its pre-Covid profitability levels, the report said. The off-price apparel and home fashion chain reported fiscal Q4 earnings late Tuesday of $1.82 per diluted share and sales of $6.02 billion for the quarter ended Feb. 3. Morgan Stanley raised Ross Stores’ price target to $161 from $155 and maintained its overweight rating on the stock.

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CFRA Retains Hold Opinion On Shares Of The Estee Lauder Companies Inc.

/ / Consumer Discretionary /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Shares are ~3% lower in intraday trading on reports of Valisure’s, an independent U.S. laboratory, findings during testing of acne treatment products containing Benzoyl Peroxide (BPO). Valisure found BPO acne products are fundamentally unstable and can generate unacceptably high levels of Benzene, a known carcinogenic, when stored or exposed to higher temperatures by consumer handling. Benzene was found to potentially escape into the surrounding air at approximately 1,270 times the EPA’s calculated threshold for increased cancer risk, when measured in a compact car at 70 degrees Celsius. Clinique, one of EL’s leading brands, was highlighted as having BPO products. Visiting Clinique’s website we found 1/10 acne products listed BPO as an ingredient. This BPO acne product is not listed as a top-seller for Clinique across various e-commerce

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Target’s Merchandising, Brand Initiatives Should Support Traffic, Share Gains, BofA Says

/ / Consumer Discretionary /

Target’s (TGT) merchandising and brand initiatives should help the retailer recapture traffic and share gains after reporting a strong fiscal Q4, BofA Securities said in an emailed note to clients Wednesday. The investment firm raised Target’s price target to $190 from $160 and reiterated its buy rating. Target faces steeper competition in same-day delivery as many large retailers also improved same-day offerings during the COVID-19 pandemic. Still, the company’s gross margin is expected to return to 6% operating margin in fiscal 2028, according to the note. “We continue to expect [gross margin] expansion in [fiscal year 2025] as well as a comp sales & traffic inflection in [fiscal Q2] driven by easing comparisons and the expected success of TGT’s merchandising initiatives,” BofA analysts said. “We expect these benefits to be partially offset by expense deleverage, particularly in Q1 as we forecast a comp sales decline of 4%.”

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Tesla Faces Slowing Demand in Challenging Year, Morgan Stanley Says

/ / Consumer Discretionary /

Tesla’s (TSLA) first-half results could come in below expectations on profitability amid a challenging year for electric vehicles, Morgan Stanley said in a report. “If there was ever a time for Tesla to potentially post a GAAP EBIT loss in the auto business, it may be this year,” Morgan Stanley said, pointing to decelerating EV demand in key markets and an over-supplied China EV market. Morgan Stanley expects Tesla to pull back on price cuts to defend its margins and cash flow in response to falling profitability. “However, we still forecast Tesla FY24 FCF of <$100mm for the year,” the report said. For FY2024, Morgan Stanley cut its GAAP EPS forecast for the company to $0.99 from $1.54 previously. Morgan Stanley reiterated its overweight rating on Tesla while lowering its price target to $320 from $345 amid the “seemingly overwhelming bearish institutional investor sentiment.” “Tesla has significant attributes to be

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CFRA Maintains Hold Opinion On Shares Of Ross Stores, Inc.

/ / Consumer Discretionary /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We raise our 12-month price target by $14 to $138, based on 23.0x our FY 25 (Jan.) EPS estimate and slightly lower than the company’s 5-year average forward P/E multiple of 23.8x. We raise our FY 25 EPS estimate by $0.50 to $6.00 and initiate our FY 26 EPS estimate at $6.40. ROST posts normalized Q4 EPS of $1.82 vs. $1.31, $0.17 above consensus estimates on revenues of $6.02B vs. $5.21B and $208M above estimates. ROST said Q4 revenues and EPS benefitted by $308M and $0.20, respectively, due to the 53rd week in the FY. Q4 operating margin expanded by 165 bps Y/Y to 12.4% due to strong gains in same-store sales and lower freight costs. The company’s board approved a new $2.1B share repurchase program and

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Target’s ‘Pivot to Growth’ Coming as It Moves Past Recent Issues, Says D.A. Davidson

/ / Consumer Discretionary /

By James Rogers Target’s stock soared following the company’s fourth-quarter results Tuesday Target Corp. is well positioned for growth in its second-quarter as the retail giant gets past the challenges of recent years, such as the 2023 controversy over Pride-themed products, according to analyst firm D.A. Davidson. The discount retailer’s shares soared following the company’s fourth-quarter results to end Tuesday’s session up 12%. The stock is up 3.3% Wednesday. “For all the enthusiasm around TGT’s 4Q23 results, sales are still down year over year and are expected to be again in 1Q24,” wrote D.A. Davidson analyst Michael Baker, in a note released Tuesday. “But, the pivot to growth is coming, most likely in 2Q24 as TGT cycles the start of the worst of the negative comps a year ago, in part due to the Pride issue.” Target (TGT) pulled Pride-themed products from some stores in the run up to June

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Target’s Recovery Looking Well on Its Way

/ / Consumer Discretionary /

Target’s 4Q results and 2024 guidance are evidence that the retail giant is rebounding from a rocky 2023, as seen by its continued margin recapture and sequential improvements on the top line, UBS analysts say in a research note. There was quarter-to-quarter improvement in most discretionary categories, including toys and consumer electronics, which coincided with some sequential moderation in food inflation, the bullish analysts say. That suggests that a lack of food inflation this year could unlock some extra dollars in consumers’ budgets for discretionary spending, they say, raising their price target on the stock to $191 from $174. Shares rise 3.8% to $175.04.

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Ross Stores (NASDAQ:ROST) Q4 2023 Earnings Conference

/ / Consumer Discretionary /

The following is a summary of the Ross Stores, Inc. (ROST) Q4 2023 Earnings Call Transcript: Financial Performance: Ross Stores exceeded Q4 predictions, with earnings per share rising to $1.82, a significant leap from the previous year’s $1.31. The company saw Q4 2023 sales climb to $6 billion, boosted by a 7% increase in comparable store sales. Net income for fiscal year 2023 rose to $1.9 billion from $1.5 billion recorded in the previous year, whilst earnings per share increased to $5.56 from $4.38. The 2023 fiscal year results included a beneficial $308 million and an additional $0.20 per share due to the 53rd week. Q4 saw an operating margin increase of approximately 165 basis points to 12.4%. The company repurchased 1.9 million shares of common stock for $247 million in Q4 and 8.2 million shares for $950 million throughout the fiscal year. For 2024, earnings per share are projected

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Tesla Faces Uphill Battle: Morgan Stanley Analyst Adam Jonas Cuts Target Price, Forecasts Lower FY24 Sales Volume

/ / Consumer Discretionary /

Morgan Stanley analyst Adam Jonas on Tuesday noted both product and market issues as he slashed target price and FY24 earnings estimates for EV giant Tesla Inc (NASDAQ:TSLA). Analyst Rating: The analyst cut the target price from $345 to $320 while maintaining an ‘overweight’ rating. Tesla Thesis: In a note, the analyst noted the several downsides plaguing Tesla at the minute including dwindling EV demand, older product line-up as compared to other automakers, heavy competition and price war in China, and not the least, the increasing popularity of hybrids over battery electric vehicles in the company’s primary market of U.S.. “If there was ever a time for Tesla to potentially post a GAAP EBIT loss in the auto business, it may be this year,” Jonas wrote. The analyst said that he expects the EV giant’s first-half results for the year will fail to meet expectations with GAAP operating margins in the 2-3% range. After taking a severe

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