Retailers Warn Of Slowing Demand

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Your host, Mike Anderson, will provide a step by step breakdown of how these winning trades were first identified and how they were timed. Understanding how these trades are made will help you to identify similar trends and have confidence in executing your own successful trades. Plus: Bring your ticker and we will use Trade Algo's proprietary algorithms to help you analyze that trade you've been thinking about. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET!]( [Shadow] Hello investor, Retailers have it tough. They saw an once-in-a-decade boom in demand where people were flushed with cash from stimulus and low interest rates and spent like a drunken sailor. But things are different now. Obviously. Rates soared to above 5%. Companies are laying off people. Inflation is eating into consumers’ wallets. As a result, the overall purse of the economy has been tightened. It showed in the recent earnings by the retailers. Home Depot, Target, and Walmart reported earnings that offered clues on the state of the economy. They said the overall trend is getting worse for sales. Target CEO Brian Cornell said consumers spent less, especially on discretionary merchandise. Walmart saw the same pattern. Target CEO Brian Cornell (Photo: CNBC) Sales fell sharply after February, both retailers said. Walmart CFO John David Rainey said the drop was on partly due to the end of pandemic-related SNAP benefits and lower tax refunds. And of course, the collapse of regional banks may spooked the consumers. Bath & Body Works saw sales dropping in March before recovering in April. What was its secret? When in doubt, go for discounts. Customers spent extra during its sales events later in the quarter. Foot Locker warned that it may have no choice but to settle for markdowns for the rest of the year which likely hurt its profit margins. - “Sales have since softened meaningfully given the tough macroeconomic backdrop,” said CEO Mary Dillon. Dillon also said that the sneaker retailer’s sales were hurt by lower tax refunds and high inflation. Consumers are spending more on food and services. Things didn’t “improve nearly to the extent we expected, and that weakness has continued into May,” Dillon said. The lifesaver: This trend is notable across industries. Tapestry, the owner of Coach and Kate Spade, said sales softened but its China business recovered to balance out. Certain international markets also did well. Many multinational companies who had international exposure was able to avoid steep losses versus those who are mainly in the U.S. We saw it with Uber and Lyft. Uber played in many countries and reported better results than Lyft who is mostly operating in the US market only. Inflation remains brutal: Walmart revealed a lot of colors on inflation. CEO Doug McMillon insisted that inflation must come down soon. He said food inflation soared more than 20% on a two-year basis. - “We all need those prices to come down. The persistently high rates of inflation in these categories, lasting for such a long period of time, are weighing on some of the families we serve,” said McMillon. Top High-Growth Stock To Buy Right Now Today’s Stock Pick: Wingstop Inc. ([WING]( The best thing about the franchise model is predictability. Once a restaurant brand can validate its demand in one region, it can scale up rapidly to other regions with similar demographics. Better yet, it keeps the brand asset light. And you can’t find a better brand than Wing Stop. Its growth momentum is incredible. The brand had a system-wide sales 5-year CAGR of 19.3%. At the same time, it developed new restaurants at a pace of 11.6% CAGR during the same period. Lastly, its adjusted EBITDA compounded annually for a 21.8% five-year CAGR. (Source: Wing Stop) This number easily blew out all other top franchise brands – including Chipotle, Domino’s, McDonald’s, and Starbucks: (Source: Wing Stop) Do you know what’s even more incredible? Its average unit volume per comparable restaurant exploded by 76% since 2012! Yes, that’s right. While Wing Stop was growing its total restaurant count, its same-store also increased volume. (Source: Wing Stop) Solid business model: A franchisee would get an attractive return that would start turning profits on its initial investment in less than two years. The owner can expect an unlevered cash-on-cash return of 70%+ in the first year. (Source: Wing Stop) Immense expansion potential: Right now, Wing Stop has about 1,791 restaurants. It forecasts the potential to be at 7,000+ restaurants in the global market. The domestic market hasn’t been maxed out as it still has more than 50% remaining markets to tap into. Assuming that Wing Stop reaches its goal of 7,000 restaurants, that would be 3.9 times bigger than its current size. (Source: Wing Stop) The future would be more of the same: In Wing Stop’s case, you want more of the same. The company projects its annual unit growth to continue above 10%+. This would bring a powerful combination with its forecast of mid-single digit same-store sales growth. (Source: Wing Stop) Bottom line: Wing Stop has cracked the “growth algorithm,” and it has a clear roadmap to continue its sensational earnings growth. If you are looking to add a growth stock while the market is down, look no further than Wing Stop. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](