Market Snapshot
briefing.com
| Dow | 32742.67 | -57.16 | (-0.17%) | | Nasdaq | 12683.90 | +199.56 | (1.60%) | | SP 500 | 4150.65 | +34.14 | (0.83%) | | 10-yr Note | -4/32 | 3.81 |
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| | NYSE | Adv 975 | Dec 1894 | Vol 918 mln | | Nasdaq | Adv 1370 | Dec 3070 | Vol 4.6 bln |
Industry Watch
| Strong: Information Technology, Communication Services |
| | Weak: Energy, Consumer Staples, Health Care, Utilities, Materials |
Moving the Market
-- NVIDIA's (NVDA) huge gain boosting S&P 500 and Nasdaq, as well as fueling buying interest in other semiconductor stocks
-- Fitch putting the U.S. AAA rating on Credit Watch Negative has escalated debt ceiling worries
-- Germany reporting its second straight quarter of contraction in GDP has stoked global growth concerns
-- Treasury yields sharply higher after this morning's economic data
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Closing Summary
25-May-23 16:30 ET
Dow -35.27 at 32764.56, Nasdaq +213.93 at 12698.27, S&P +36.04 at 4152.55
[BRIEFING.COM] The major indices had a mixed showing today as participants dealt with mixed news catalysts. Chief among the news catalysts was NVIDIA's (NVDA 379.81, +74.43, +24.4%) huge gain after reporting better-than-expected fiscal Q1 results that featured spectacular fiscal Q2 revenue guidance.
NVIDIA's results fueled buying interest in other semiconductor and mega cap stocks, offering a lot of support to the broader market. The Nasdaq 100 jumped 2.5% while the Nasdaq Composite and S&P 500 rose 1.7% and 0.9%, respectively. The Invesco S&P 500 Equal Weight ETF (RSP), though, declined 0.1%. The Dow Jones Industrial Average also fell 0.1%.
The PHLX Semiconductor Index rose 6.8% with several components registering outsized gains and/or hitting new 52-week highs. TSMC (TSM 100.95, +10.82, +12.0%) and Advanced Micro Devices (AMD 120.35, +12.08, +11.2%) were among the standouts in that regard.
Still, market breadth reflected underlying weakness due to ongoing angst about the debt ceiling. Decliners led advancers by a 9-to-5 margin at the NYSE and a better than 2-to-1 margin at the Nasdaq.
That angst, though, seemed to dissipate somewhat as the session progressed. Before the open, it was reported that Fitch Ratings put the nation's AAA rating on Credit Watch Negative. It was also reported that Congressional members will leave Washington today for Memorial Day, but were warned that they should be ready to return on 24 hours notice if a debt ceiling deal is reached.
Later reports emerged that seemingly calmed some nervousness around the debt ceiling. Negotiators are close to a deal on a "slimmed-down" debt ceiling, according to Bloomberg. Also, Republicans and Democrats are narrowing differences on the debt limit, according to Reuters.
The S&P 500 information technology sector (+4.5%) was the top performer by a wide margin thanks to NVIDIA and its other mega cap components. Meanwhile, the energy (-1.9%) and utilities (-1.4%) sectors saw the steepest declines.
Market participants were also digesting some relatively pleasing U.S. economic data today. The initial jobless claims report showed continued strength in the labor market and Q1 GDP was revised up to 1.3% from 1.1%. This was in contrast to some weak data out of Germany, which reported its second straight quarter of contraction in GDP, stoking global growth concerns.
Treasuries retreated with most tenors settling sharply lower. Selling picked up after the release of this morning's data. The 2-yr note yield rose 15 basis points to 4.49% and the 10-yr note yield rose 10 basis points to 3.81%. Notably, the CME FedWatch Tool shows a 48.2% probability of a 25 basis points rate hike at the June meeting versus 36.4% yesterday and 8.3% a month ago.
- Nasdaq Composite: +21.3% YTD
- S&P 500: +8.1% YTD
- Russell 2000: -0.4% YTD
- S&P Midcap 400: -0.4% YTD
- Dow Jones Industrial Average: -1.2% YTD
Reviewing today's economic data:
- The second estimate for Q1 GDP was revised up to 1.3% (Briefing.com consensus 1.1%) from the advance estimate of 1.1% and the GDP Price Deflator was revised up to 4.2% (Briefing.com consensus 4.0%) from the advance estimate of 4.0%.
- The key takeaway from the report is that consumer spending remained strong (+3.8%) in the first quarter in spite of the ongoing inflation pressures.
- Initial claims for the week ending May 20 increased by 4,000 to 229,000 (Briefing.com consensus 247,000). The prior week saw a downward revision to 225,000 from 242,000. Continuing jobless claims for the week ending May 13 decreased by 5,000 to 1.794 million.'
- The key takeaway from the report is that initial jobless claims are nowhere near recession levels. They continue to register in a manner that connotes tight labor market conditions.
Pinduoduo (PDD), Booz Allen Hamilton (BAH), and Big Lots (BIG) are among the more notable companies reporting earnings ahead of the open tomorrow.
Looking ahead to Friday, market participants will receive the following economic data:
- Personal Income (Briefing.com consensus 0.4%; prior 0.3%) and Spending (Briefing.com consensus 0.4%; prior 0.0%), PCE Price Index (Briefing.com consensus 0.3%; prior 0.1%), and core-PCE Price Index (Briefing.com consensus 0.3%; prior 0.3%) for April at 8:30 a.m. ET
- Durable Goods Orders (Briefing.com consensus -1.0%; prior +3.2%) and Durable Goods Order, excluding transportation (Briefing.com consensus -0.1%; prior +0.3%) for April at 8:30 a.m. ET
- Adv. Intl. Trade in Goods (prior -$84.6 billion), Adv. Retail Inventories (prior 0.7%), and Adv. Wholesale Inventories (prior 0.1%) for April at 8:30 a.m. ET
- University of Michigan Consumer Sentiment - final for May (Briefing.com consensus 57.8; prior 57.7) at 10:00 a.m. ET
Treasuries retreat; Earnings ahead of the open tomorrow
25-May-23 15:30 ET
Dow -15.04 at 32784.79, Nasdaq +234.56 at 12718.90, S&P +40.95 at 4157.46
[BRIEFING.COM] The main indices are climbing toward earlier highs ahead of the close.
Treasuries retreated with most tenors settling sharply lower. The 2-yr note yield rose 15 basis points to 4.49% and the 10-yr note yield rose 10 basis points to 3.81%.
Pinduoduo (PDD), Booz Allen Hamilton (BAH), and Big Lots (BIG) are among the more notable companies reporting earnings ahead of the open tomorrow.
Looking ahead to Friday, market participants will receive the following economic data:
- Personal Income (Briefing.com consensus 0.4%; prior 0.3%) and Spending (Briefing.com consensus 0.4%; prior 0.0%), PCE Price Index (Briefing.com consensus 0.3%; prior 0.1%), and core-PCE Price Index (Briefing.com consensus 0.3%; prior 0.3%) for April at 8:30 a.m. ET
- Durable Goods Orders (Briefing.com consensus -1.0%; prior +3.2%) and Durable Goods Order, excluding transportation (Briefing.com consensus -0.1%; prior +0.3%) for April at 8:30 a.m. ET
- Adv. Intl. Trade in Goods (prior -$84.6 billion), Adv. Retail Inventories (prior 0.7%), and Adv. Wholesale Inventories (prior 0.1%) for April at 8:30 a.m. ET
- University of Michigan Consumer Sentiment - final for May (Briefing.com consensus 57.8; prior 57.7) at 10:00 a.m. ET
Earnings after the close; energy complex falls
25-May-23 15:05 ET
Dow -57.16 at 32742.67, Nasdaq +199.56 at 12683.90, S&P +34.14 at 4150.65
[BRIEFING.COM] Things are little changed at the index level over the last half hour.
Energy complex futures settled the session lower. WTI crude oil futures fell 3.3% to $71.83/bbl and natural gas futures fell 3.4% to $2.47/mmbtu.
Costco (COST), Gap (GPS), Ulta Beauty (ULTA), Workday (WDAY), Marvell (MRVL), Autodesk (ADSK), and RH (RH) are among the more notable companies reporting earnings after the close today.
A short time ago, Bloomberg reported that Republicans and Democrats are narrowing their differences on the debt limit, but no deal has been reached.
DISH Network gains on wireless plans report, Illumina slips after Icahn nominee gets Board seat
25-May-23 14:30 ET
Dow -9.96 at 32789.87, Nasdaq +231.26 at 12715.60, S&P +41.26 at 4157.77
[BRIEFING.COM] The S&P 500 (+1.00%) has moved moderately higher over the prior half hour, now showing gains north of 41 points.
S&P 500 constituents DISH Network (DISH 6.83, +0.60, +9.63%), Digital Realty Trust (DLR 91.93, +5.44, +6.29%), and Ralph Lauren (RL 114.50, +6.28, +5.80%) pepper the top of the index. DISH moves higher after reports the company is in discussions to sell wireless plans through Amazon (AMZN 114.79, -1.96, -1.68%), DLR recoups all of yesterday's broader industry selloff, and RL advances on earnings.
Meanwhile, Illumina (ILMN 190.62, -22.03, -10.36%) is today's top laggard in light of news that Icahn nominee Andrew Teno was added to the Board.
Gold extends losing streak to four
25-May-23 14:00 ET
Dow -32.38 at 32767.45, Nasdaq +215.78 at 12700.12, S&P +37.41 at 4153.92
[BRIEFING.COM] With about two hours to go on Thursday the tech-heavy Nasdaq Composite (+1.73%) holds a commanding lead.
Gold futures settled $20.90 lower (-1.1%) to $1,943.70/oz, extending its recent losing streak to four sessions in a row, now down about -1.9% week-to-date.
Meanwhile, the U.S. Dollar Index is up about +0.3% to $104.19.
NVIDIA distracts from debt ceiling uncertainty in big way
There is a lot of news to take in this morning, yet there are two developments taking center stage. The first is NVIDIA's (NVDA) better-than-expected fiscal Q1 report and its astounding fiscal Q2 revenue guidance. The second is the reaction to that report. Shares of NVDA are up 29% in pre-market trading. That move alone is more than the entire market cap of Cisco (CSCO).
Those two developments promise to have some staying power today, yet there are some other happenings of note that have dampened some of the enthusiasm for NVIDIA's remarkable move.
Fitch put the U.S. AAA rating on Credit Watch Negative and Germany reported its second straight quarter of contraction in GDP. The former is a consequence of the debt ceiling impasse, among other things, and the latter is a consequence of rising interest rates, among other things.
In terms of the debt ceiling negotiations, Republicans and the White House are saying that they think progress was made in the latest talks, yet the House members have been dismissed for the Memorial Day weekend, told however that they should be ready to come back on 24 hours notice to vote on legislation if a debt ceiling agreement is reached, according to The Hill.
That's not quite the equivalent of a hanging chad, but suffice it to say, the American people and the world have been left hanging by this lack of agreement, no matter how good someone feels about the negotiations or how confident they are that there won't be a default.
This uncertainty has been a driver of this week's weakness along with rising market rates, which have been recalibrating for the Fed sticking with higher rates for longer. Rates are up again today, partly because of the Fitch warning, partly because of the abiding hope that a debt ceiling deal will ultimately get done, and partly because of encouraging economic data that supports the Fed staying higher for longer.
The 2-yr note yield is up 14 basis points to 4.48% and the 10-yr note yield is up six basis points to 3.78%.
Briefly, the second estimate for Q1 GDP was revised up to 1.3% (Briefing.com consensus 1.1%) from the advance estimate of 1.1% and the GDP Price Deflator was revised up to 4.2% (Briefing.com consensus 4.0%) from the advance estimate of 4.0%.
The key takeaway from the report is that consumer spending remained strong (+3.8%) in the first quarter in spite of the ongoing inflation pressures.
A mixed batch of guidance from specialty retailers since yesterday's close, however, has raised some concerns about consumer spending remaining strong. Be that as it may, the latest initial jobless claims report has been an offset for those concerns.
Initial claims for the week ending May 20 increased by 4,000 to 229,000 (Briefing.com consensus 247,000). The prior week saw a downward revision to 225,000 from 242,000. Continuing jobless claims decreased by 5,000 to 1.794 million.
The key takeaway from the report is that initial jobless claims are nowhere near recession levels. They continue to register in a manner that connotes tight labor market conditions.
The equity futures market, meanwhile, continues to register in a manner that connotes ongoing strength in the tech sector and growth stocks, and some trailing action for other stocks.
Currently, the S&P 500 futures are up 39 points and are trading 0.9% above fair value, the Nasdaq 100 futures are up 320 points and are trading 2.4% above fair value, and the Dow Jones Industrial Average futures are down two points and are trading in-line with fair value.
-- Patrick J. O'Hare, Briefing.com
e.l.f. Beauty delivered a glowing MarQ report, sending shares to 52-week highs (ELF)
Shares of e.l.f. Beauty (ELF +19%) are glowing today, exploding to 52-week highs, after the value-priced cosmetic supplier crushed top and bottom line estimates in Q4 (Mar) and issued bullish FY24 guidance. Strength was broad-based across national and international retailers, with digital sales accelerating, culminating in ELF expanding its market share by 270 bps and increasing its rank within cosmetic brands to #3 for the first time. The exceptional market share gains highlight the pronounced trade-down activity taking hold on the retail landscape as inflation refuses to budge, a favorable trend for ELF going forward.
Even though beauty categories across retailers, such as Target (TGT) and CVS Health (CVS), where ELF commands shelf space, remained resilient during AprQ, investors were still worried that softness within the broader retail sector would drag down ELF, evidenced by its shares falling ~12% since April highs. However, given these sliding expectations leading into ELF's MarQ report, its blowout figures act as a huge sigh of relief regarding the cosmetics industry.
- ELF grew its sales by 78.2% yr/yr to $187.36 mln, increased gross margins by approximately 470 bps, and delivered a 223% jump in adjusted EPS to $0.42. Digital sales continued to play an increasingly important role in ELF's total revenue growth, with online consumption up over 75% during FY23, driving 17% of overall consumption. At the same time, ELF's emphasis on improving its physical presence through its top-two partners, Target and Walmart (WMT), assisted its productivity on a sales per linear foot basis.
- Alongside a global return to normalized activity keeping the throttle down on demand for beauty products, ELF is excited about its massive potential overseas. International sales surged by over 60% yr/yr in FY23 but represented only around 12% of ELF's total revenue. Management noted that it is seeing strong results behind its expansion strategy in Canada and the U.K., being the fastest-growing top 10 brand in both countries.
- ELF is not slowing its pace going forward, expecting to continue delivering gross margin expansion in FY24, targeting around 100 bps yr/yr. On top of this, ELF guided FY24 adjusted EPS and revs well ahead of consensus, projecting $1.73-1.76 and $705-720 mln, respectively. ELF's FY24 sales forecast translates to +22-24% growth yr/yr on top of the +48% increase posted in FY23.
The main takeaway is that despite the retail sector facing sticky inflationary pressures, the beauty market continues to prove its resistance to macroeconomic forces, evident by ELF's tremendous MarQ results and upbeat FY24 outlook. This dynamic is a good sign ahead of Ulta Beauty's (ULTA) AprQ report today after the close. ELF grew its business at Ulta by over 70% during the year and will see additional shelf space this fall.
Snowflake buried by avalanche of selling as growth slows due to lower customer consumption (SNOW)
Data storage and analytics company Snowflake (SNOW) is facing an avalanche of selling today. Although the company topped quarterly EPS and revenue estimates for the third consecutive quarter, its 2Q24 product revenue guidance of $620-$625 mln disappointed, signaling a steep slowdown in spending from some enterprise customers.
A key point to keep in mind about SNOW is that the company implements a consumption model that charges customers based on their usage of its platform. While this approach allows SNOW to more fully capitalize on strong demand trends when business conditions are favorable, it also puts the company in a bind when conditions are not. With the pendulum swinging in the wrong direction for SNOW, its growth rates are fading, which is especially problematic for a stock that's trading with a 1-year forward P/S north of 12x.
- In 1Q24, product revenue grew by 50% to $590.1 mln, continuing a steady down trend in growth. Looking back at the year-earlier period, product revenue jumped by 84% and remained consistent in 2Q23 at 83%. In 3Q23, though, product revenue growth decelerated considerably to 67%, followed by another drop in 4Q23 to 54%.
- The issue that's causing investors to head for the exits is that its Q2 product revenue guidance indicates another sharp decline in growth to 33-34%.
- During the earnings call, SNOW's executives didn't sugarcoat the situation with CEO Frank Slootman stating that the company is operating in an "unsettled demand environment", reflected by customers' consumption patterns.
- He added that a few of the company's largest customers are taking a closer look at their spending on SNOW's platform, while some organizations are deleting stale and less valuable data in order to lower their storage and compute costs.
- Perhaps most concerning, though, is that consumption trends weakened throughout the quarter. After a strong start in February and March, consumption began to slow after the Easter holiday, and it hasn't picked up since then.
On the positive side, SNOW continues to make progress on profitability due to greater scale in public cloud data centers, product improvements, and cost containment efforts on the sales and marketing line. Non-GAAP operating margin came in at 5% for the quarter, comfortably exceeding its guidance of flat operating margin.
However, slowing product revenue growth, coupled with a rich valuation, is a problematic mix that's hitting the stock hard today.
NVIDIA's awe-inspiring guidance puts company at center of the AI universe (NVDA)
Ever since OpenAI launched its ChatGPT chatbot in November 2022, the hype surrounding generative AI has exploded, but there's nothing artificial about how the emergence of this technology is igniting a powerful growth catalyst for chip maker NVIDIA (NVDA).
Last night, NVDA delivered an unforgettable Q1 earnings report in which it not only easily surpassed quarterly EPS and revenue estimates, but it also issued Q2 revenue guidance that made a mockery of analysts' estimates. In fact, the magnitude of upside was so great that we initially believed there may have been an error in regard to the consensus estimate figure. However, looking back at NVDA's Q1 guidance of $6.37-$6.63 bln, we found that the company itself badly underestimated the level of demand for its GPUs.
- NVDA's Q2 revenue guidance of $11.0 bln, plus or minus 2%, crushed estimates by about $4.0 bln, launching the stock to new all-time highs and taking other AI-focused semiconductor stocks for a ride higher, too.
- For instance, competitor Advanced Micro Devices (AMD) is making an impressive move higher, as is Taiwan Semiconductor Manufacturing (TSM), which makes NVDA's chips.
Simply stated, NVDA's spectacular earnings report put it at the center of the AI universe.
- The company's Data Center segment in particular is perfectly positioned to capitalize on what CEO Jensen Huang has called a "ten-year transition" to retool data centers in order to support accelerated computing and generative AI.
- This transition will touch upon almost any industry one can think of. As Mr. Huang stated in the earnings press release, companies are "racing to apply generative AI into every product, service, and business process."
- Critically, NVDA doesn't seem to be contending with any serious supply chain issues or materials shortages, stating that it's significantly increasing supply to meet the surge in demand.
NVDA is only in the first inning of this growth cycle.
- Revenue actually decreased by about 13% in Q1, but the company's Q2 guidance calls for a huge upswing in growth to 64% at the midpoint. The good news doesn't end there.
- The company's data center chips, including H100, Grace CPU, Grace Hopper Superchip, and Quantum 400 InfiniBand, carry higher average selling prices than its other chips.
- As data center becomes an even larger portion of NVDA's overall mix, margin expansion and earnings growth are sure to follow. On that note, NVDA guided for Q2 non-GAAP gross margin of 68.6%-70.0%, plus or minus 50 bps, compared to its Q1 non-GAAP gross margin of 66.8%.
NVDA was already an expensive stock heading into the earnings report with a forward P/E of about 45x.
- Now, the stock's valuation looks even more egregious with a forward P/E of about 61x.
- However, earnings estimates are bound to move sharply higher in the coming days, and it's hard to argue that NVDA doesn't warrant a premium valuation based on its accelerating growth and its optimal positioning as the key force behind the explosion of AI.
The main takeaway is that this quarter is seen as a landmark moment for NVDA, establishing itself as the leader in the emergence of AI technology.
Best Buy is confident 2023 will mark a bottom in retail tech spending; reaffirms FY24 outlook (BBY)
Shares of Best Buy (BBY) are looking to finally reverse course today following the retail tech giant's Q1 (Apr) earnings beat. The stock has struggled since hitting one-year highs in February, tumbling over 23% as of yesterday's close, trending in line with the broader retail sector, while the S&P 500 slipped just 2% over that same timeframe (illustrating its tech bias).
However, BBY's Q1 report displayed signs of stabilization, reflected in management's reiterated FY24 (Jan) targets and commentary that the company is tracking closer to the midpoints of its full-year forecasts, implying steadily improving yr/yr comp performance. BBY also reiterated its expectation that 2023 will be the bottom for the decline in tech demand.
- Numbers still continued declining during Q1, with earnings contracting 27% yr/yr to $1.15, revs falling 11% to $9.47 bln, and same-store sales slipping -10%, showcasing the unfavorable macroeconomic environment. Relative weakness stemmed from BBY's core categories (~86% of Q1 revs): computing and mobile phones, consumer electronics, and appliances, which all saw comps fall by double-digits for the third-straight quarter.
- On the plus side, management commented that the promotional environment played out as expected, being slightly more active than last year but mostly normalizing to pre-pandemic levels. Likewise, inventory levels continued normalizing, declining 17% yr/yr.
- BBY anticipates current economic conditions to continue pressuring demand in its industry for the remainder of the year but is optimistic that the situation will not worsen. As a result, it reiterated its FY24 earnings, sales, and comp predictions of $5.70-6.50, $43.8-45.2 bln, and negative 3-6%, respectively, and expects to achieve results closer to the midpoint of each estimate.
- During the currently challenging economic situation, BBY is focused on improving its membership program, which it believes drives higher customer engagement and an increased share of consumers' wallets over time. Starting June 27, BBY is rolling out its new three-tiered membership program: My Best Buy, My Best Buy Plus, and My Best Buy Total. The differences between the three tiers involve pricing and services, with the lowest tier resembling its current free program. In contrast, its highest tier, which will cost $179.99 annually, includes tech support, extended protection, and in-home installation.
BBY's Q1 numbers may not have wowed investors, but the company's reiterated FY24 guidance was encouraging as it signaled potential stabilization within the retail tech industry. Although the year ahead will likely remain volatile, BBY is confident it will return to growth, pointing to long-term tailwinds beginning to materialize. For example, CEO Corie Barry noted that U.S. households contain twice as many connected devices as just four years ago, largely due to the pandemic. With more devices come increased upgrade and replacement frequency. Furthermore, CEO Barry remarked that BBY is staring at numerous opportunities resulting from bubbling macro trends, including augmented reality, generative AI, and expanding broadband access.
Dollar Tree loses quite a few leaves as unfavorable mix and elevated shrink pressure margins (DLTR)
Dollar Tree (DLTR -14%) is losing quite a few leaves today following its Q1 (Apr) report this morning. The dollar store chain beat on revenue but missed on EPS. The EPS guidance for Q2 (Jul) was even more troubling as it came in well below analyst expectations. And that is even with Q2 revenue guidance being in-line. Whenever revs are in-line, but not EPS, you know there is some margin compression and that is what we are seeing with DLTR.
- First the good news. DLTR says it continues to gain market share and its traffic and unit volume growth are driving strong top line momentum. Management sees this as a clear validation of the actions it has taken on pricing. Specifically, its Dollar Tree Plus strategy has been to break above the hard $1 price level. DLTR has been adding $3 and $5 items and plans to roll this out to another 1,800 stores this year.
- Enterprise same-store comps in Q1 came in a very respectable +4.8% (Dollar Tree +3.4%; Family Dollar +6.6%). DLTR guided to Q2 enterprise comps in the mid-single digits. It also reaffirmed its full year comp guidance in the low- to-mid-single-digits. As you can see, sales/comps look quite good. The problem is mostly related to margin compression. In Q1, operating margin fell to just 5.7% from 10.6% a year ago.
- Two main factors are impacting margins: First, macro headwinds (inflation, reduced govt stimulus generally, reduced SNAP benefits, lower tax refunds) are causing more families to prioritize needs over wants. This results in a mix shift toward consumables/necessities and away from discretionary categories. This shift is pressuring margins. The good news is that this shift is driving higher repeat traffic to stores and keeping sales high, but these are lower margin sales.
- The other major factor impacting margin is elevated shrink (theft, organized retail crime), which hurt Q1 gross margin by 60 bps and shaved $0.14 off EPS compared to last year. That is pretty significant and it is a similar theme we heard from Target last week. Target described inventory shrink as a worsening trend and increasingly urgent. TGT estimated shrink will reduce full year profitability by more than $500 mln compared with last year.
Overall, this quarter was a letdown for investors. Sales/comps have kept pace, but elevated shrink and an unfavorable sales mix are pressuring margins. Unfortunately, DLTR sees these issues persisting through the balance of the year. This report has sent the stock to a new 52-week low this morning and makes us cautious on the dollar store segment generally.
This report was notably worse than what we saw from off-price retailers like TJX, ROST, although BURL's miss-and-guide down today was troubling. We had thought that the dollar store segment's grocery exposure relative to the off-price retailers might provide an advantage, but we are not really seeing that. This report makes us nervous for Dollar General's (DG) and Five Below's (FIVE) Q1 reports next week (both on June 1).
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