For whatever it’s worth — technically a lot in a world where the overall price level’s ~30% higher than it was at the beginning of the decade — nominal spending in the US was solid ahead of the war.
The Census Bureau on Wednesday said retail sales rose 0.6% in February, ahead of estimates and a sharp rebound from January when — wouldn’t you know it — it was cold outside.
As the figure below shows, the headline pace of nominal spending was the briskest since last summer.
The control group — i.e., what counts for GDP forecasting — showed a 0.5% advance, easily ahead of estimates, more than double January’s pace and the best readout since October. That’s good news.
The ex-autos print, 0.5%, beat by two tenths and the ex-autos/gas readout by a tenth.
Only two major categories showed a decline in Wednesday’s release. Spending at nonstore retailers rose 0.7% and the food services and drinking places line — the only services sector category — rose 0.4%.
The three-month average annualized pace for the control group moved up to 2.3%.
All in all, this was a decent read on spending, but because the data’s from February, it’ll be viewed as relevant only to the extent it suggests overall US spending was resilient on the eve of the war.
NKE -15% on guide-down for the rest of the calendar year from weaker demand and inventory build. Surprisingly, no questions about the supply chain; for products made in Asia by contract manufacturers from refined oil and gas and shipped worldwide using bunker, jet, and diesel fuel, you’d think analysts would ask. My guess is +50% materials/transportation cost -> -60-80bp gross margin. Also not many questions about consumer reactions; when America’s war sends gasoline is +20% to +40%, store hours cut, even fuel rationing, you’d think a few consumers might rethink buying new shoes from the quintessential “Americana” brand.
Nike thing’s overdone by now. I’m not saying “buy it,” but at a certain point the fundamental, underlying reality — i.e., that this is a brand that isn’t going away — will be the only thing that matters.
I’m not well-versed enough in that space to venture a guess as to what level (on the stock) constitutes that moment, but Nike’s Nike. It ain’t goin’ nowhere. It will be a bargain at some point, I just don’t know where that point is.
I think when NKE can finally get on its feet and start delivering clean beat/raise, investors can look for earnings power $3.70 ish and a double from here. But for now the company keeps finding new ways to say “while our comeback is taking longer than we would like, we have a clear set of plans in place” and the stock is 30X FY1. I’m hoping to buy sometime in 2H.
UPS is another name like that.
Its not all NKE specific. Look at Adidas, Puma, UnderArmor, Lululemon, all the established athleisure brands, they have all sucked for years. Then compare to Dicks, Academy, other sporting goods retail, and they have done a lot better, as have the “new” brands like Hoka, On, etc. But Nike was the special winged deity name and needs to sink deep into the mud to be reborn.