The bank crisis, Fed and macro continue to lead the market in a daily rollercoaster, and while that won’t change for at least a few days, Goldman’s consumer retail trader Scott Feiler notes in his trading note today, there are some notable things to highlight in consumer…
1. First signs of a notable low-income slowdown?:
Feiler notes that investors have been bearish consumers for much of the year, even before the issues with the banks: he writes that “we had heard COST and VISA talk to modest deceleration in February (100-200 bps), but nothing precipitous. The big question has been whether anyone has seen a more worrisome slowdown with tax refunds (down double-digits y/y) and SNAP reductions (end of February) more front and center.”
Well, according to the Goldman trader, we got that answer this morning from CTRN (Citi trends): it is an apparel store that caters to the low-income consumer. They guided 1Q sales to be down low double-digits vs Consensus +2%. This does not seem like conservatism like some other below consensus 1Q guides, as they explicitly said 1Q is off to a slow start. They said that given the macro-economic environment, they expect low income families, the bulk of their customer base, to remain under pressure in 1H.
2. Is this a read-across though or idiosyncratic?
CTRN is not getting a pass on that guide/commentary, with the stock -14%. The Goldman trader notes that “some of the feedback this morning from investors was that many consumer companies were at competitor conferences last week and the majority of companies continued to sound “fine” still.” While some of the other low-income names are underperforming, including WMT/BIG/DG/DLTR/FIVE/MCD, it’s still not clear that is just due to their low-income exposure, but potentially also from the rotation into beta today (IWM > SPY by over 100 bps today).
Bottom line: “investors are taking the comments from CTRN at least somewhat seriously, but are skeptical it’s a true read-across.”