Consumer Spec - Pre Market Wrap
BBWI (+), CPRI (+), ANF (+), DKS (-) Pre | Goldman SPX 8,000, BNP Month-End Rebalancing, MGM Double Upgrade, DG Downgrade, AZO Consumer Comments, UBS Auto Dealers Init, LULU Wilson Settlement, RV Weak
Consumer focus back on earnings today with BBWI (+10%) and CPRI (+2%) trading higher while DKS (-3%) lower on lack of EPS flow-through despite better comps and ANF (+5%). Outside of EPS, Reuters reporting that LULU is close to settlement with founder Chip Wilson while there's also some ratings changes away (MGM +3%, DG -2%) and insider transaction stock transactions moving some stocks (CELH +2%, NCLH +2%).
Top Insider Purchase AH's +$100K
CELH - Chief Executive Officer P 8,475 $29.36 (Total Amount: $248,826) -- Direct
CELH - Director P 8,400 $29.73 (Total Amount: $249,732) -- Direct
CELH - President & COO P 7,500 $29.04 (Total Amount: $217,800) – Direct
NCLH - President and CEO P 153,000 $16.37 (Total Amount: $2,504,610) -- Direct
MACRO & MARKETS
SPX — GOLDMAN HIKES YEAR END TARGET TO 8,000 ON BROADENING AI EARNINGS THESIS
Goldman lifts its S&P 500 year-end target to 8,000 from 7,600, the firm says, aligning with Morgan Stanley and Deutsche Bank at roughly 17% implied full-year upside. The analyst frames AI-driven earnings growth as the common driver across all three calls. Tape is constructive into the print, with S&P futures +0.3% and Nasdaq 100 +0.4% as of 5:25am ET, and the 10-year yield down a fifth straight session to 4.47%, “rates helping the bid.”
BNP LESS BULLISH SHORT TERM — FLAGS UP TO $20B MONTH END REBALANCING SUPPLY AS MECHANICAL OVERHANG
BNP Paribas estimates as much as $20B of US equity supply hits into month-end as asset managers rebalance, the firm says. The analyst characterizes the flow as “mechanical, not fundamental,” but a real near-term overhang on the tape.
AZO CONFERENCE CALL QUOTES ON CONSUMER & MACRO
On the State of the Consumer
Management characterized the current consumer landscape as stable but bifurcated, noting that lower-income individuals remain under sustained pressure.
Persistent Pressure: “The lower-end consumer has been under pressure for, frankly, quite some time. I’d say more than two years. And what I would say is they’ve been relatively stable. So there hasn’t been a significant wobble in that lower-end consumer”.
Stability at the High End: “The higher-end consumer, we think, is still doing okay. And we think that’s been relatively stable over the last couple of quarters”.
Resistance to Trade-Downs: Despite economic pressures, management noted they “don’t see a lot of trade down” because automotive parts are typically specific “break/fix” items with limited alternatives.
On the Economy and Inflation
Management discussed the impact of inflation and potential policy shifts like tariffs on their business model.
Macroeconomic Pressure: AZO acknowledged that the economy has been “putting pressure on consumers’ wallets ‘for the last 20 months’” but noted the “resilience of demand” in core automotive category
Good observations from BofA consumer desk:
Here is averaged ‘EPS Day’ volatility by reporting season … Consumer vol increasingly elevated
And here are average EPS Day moves this season alone … notably, the Retail and Staples downside moves > upside ones
CONSUMER STREET RESEARCH
Upgrades
MGM Resorts (MGM) Raised to Buy at Truist Secs; PT $55
MGM Resorts (MGM) Raised to Overweight at JPMorgan; PT $46
Downgrades
Dollar General (DG) Cut to Hold at Deutsche Bank; PT $110
Winnebago Industries (WGO) Cut to Neutral at Citi; PT $30
Initiations
Lamb Weston (LW) Rated New Equal-Weight at Stephens; PT $46
EARNINGS REPORTS
ANF +5% — Q1 BEAT ON EPS AND MARGINS BUT SOFT Q2 GUIDE
ANF is +5% premarket after reporting Q1 EPS of 1.47 vs cons 1.28 on in-line revenue, with comps -1% (cons +0.7%) and operating margin 8% vs cons 6.8%; Abercrombie brand was +3% and APAC strong at +24%, while Hollister was flat and EMEA -10%. Management attributed EMEA softness to Middle East conflict impacts, particularly at Hollister, but flagged continued Americas strength and margin discipline.
Seems to me a mixed report that is hard to take a clear view on how the stock will tarde.
Positives: op. margin outperformance, capital return remains healthy (they repurchased ~3% of shares outstanding) and the prior full-year guidance is maintained (although they now assume a smaller tariff headwind than before and a slightly higher tax rate).
FY26 guidance was maintained (rev +3-5%, op margin 12-12.5%, EPS 10.20-11.00), though Q2 EPS guidance of 1.80-2.00 sits well below cons 2.54 on rev growth +2-4%.
Goldman on the report:
ANF’s 1Q26 results were mixed in our opinion, with much softer Hollister comp than expected. Though weakness in the banner was at least partly attributed to the conflict in the Mid-East, per management, we look for clarity on magnitude and expected continued impacts. On the bright side, much stronger gross margin delivery and 50bps of more favorable tariff outlook in the FY26 guide helped management reiterated both top- and bottom-line guidance for the year.
Options imply a 14% move, SI 9%, call 8:30am.
DKS -2% - Q1 BEAT WITH COMPS +4.1% AND RAISED LOW END COMP GUIDE
DKS is down 3-5% on profit taking after Q1 EPS of 2.90 vs cons 2.89, total comps +4.1% vs cons +3%, GM beat 10bps, and SG&A in line, with core Dick’s comps strong at +6% against elevated investor expectations near +5%.
Foot Locker returned to positive comps and Fast Break test remodels are delivering double-digit comp. FY26 EPS guidance was reaffirmed at 13.50-14.50 (cons 14.30) while the low end of comp guidance was raised at both concepts, with core Dick’s now +2.5-4% and Foot Locker +1.5-3%.
Early negative feedback centers on flow-through but expects bigger dips to get bought; the decline follows a +15% YTD run near highs, options imply 11% move, SI 9%, call 8am.
BofA consumer spec on the results:
Continues to expect FY26 non-GAAP EPS guide: $13.50-14.50 … early bears poking holes at not enough bottom-line flow-through and no EPS raise. Though, did nudge up the FY EBIT guide by small. Positioning lean into this: owned imo.
BBWI +1-% — Q1 TOP AND BOTTOM LINE BEAT WITH GUIDANCE REAFFIRMED
BBWI is higher premarket after a Q1 EPS beat of 0.32 vs cons 0.29 on revenue of 1.38B vs cons 1.36B, with Q2 guidance of 0.20-0.25 (cons 0.21) and FY27 reaffirmed. Management said results exceeded guidance and that efforts to strengthen hero categories, modernize the brand, and expand reach are beginning to resonate, though performance remains below the brand’s potential, with improvement expected to build through 2026 and more meaningfully into 2027.
The company also disclosed its CFO is departing. SI 8%, call 8:30am.
CPRI -5% — Q4 EPS BEAT AND ABOVE CONSENSUS FY27 GUIDE BUT TARIFF ASSUMPTIONS IN DEBATE
Tariff driven beat which has been generally faded or shorted.
Q4 EPS of 0.22 vs cons 0.12 on slightly lower revenue (796M vs 800M), with GM much better at 64.8% vs cons 59.1%, though the 4Q margin upside was largely driven by a $40M COGS reduction tied to estimated IEEPA tariff refunds.
Michael Kors revenue missed at 656M (cons 666M) and was down -8.4% cc, while Jimmy Choo beat at 140M. The analyst adds FY27 guidance is well above on EPS at 2.15 (~40% growth) vs cons 1.84 on in-line revenue, driven by margin assumptions including low-double-digit MK margins, making tariff assumptions the key debate; 1Q EPS is guided above at 0.40 (cons 0.31) on revenue below at 750M (cons 791M). Stock is -25% YTD on lost turnaround confidence, trades under 10x P/E on initial FY27 EPS, options imply 14% move, SI 9%, call 8:30am.
“The Company is entitled to a refund of approximately $65 million in IEEPA tariffs previously paid to U.S. Customs and Border Protection … The Company has begun filing refund claims with CBP and expects to recover the full amount …”
ANALYST RESEARCH
MGM: DOUBLE UPGRADE FROM JPMORGAN AND TRUIST ON LAS VEGAS STRIP INFLECTION
MGM Resorts drew two upgrades this morning. JPMorgan’s Daniel Politzer moved to Overweight from Neutral, lifting his PT to $46 from $41 (implying ~20% upside), arguing LV Strip EBITDAR estimates have bottomed and should improve on easier comps and a resilient US leisure traveler. He flags ~50% drive-in Strip traffic and value promotions as demand support, modest cannibalization risk from Hard Rock’s 4Q27 opening, a ~14% implied FCF yield, 11% short interest, and valuation support from the CZR deal and buybacks. Separately, Truist’s Barry Jonas upgraded to Buy from Hold, raising his PT to $55 from $42, citing his Las Vegas Consumer Perception and Strip room-rate surveys, a strong group/event calendar, and easier summer comps. Both see potential upside to Street estimates. Bull case: positive Strip inflection, favorable supply/demand, capital returns, and improving sentiment driving a re-rate. Bear/watch items: inflation and fuel-price sensitivity, geopolitical/macro noise, and execution into new supply.
DG: DEUTSCHE BANK DOWNGRADES TO HOLD, PT CUT TO 110 FROM 170 ON K-SHAPED CONSUMER PRESSURE
Deutsche Bank’s Krisztine Katai downgraded Dollar General to Hold from Buy, slashing the PT to $110 from $170 ahead of the 6/2 print. The analyst sees DG’s customer base increasingly challenged, with a widening K-shaped economy likely capping SSS upside — a view underscored by the firm’s proprietary dbDIG Consumer Concerns survey showing disparity between lower- and higher-income cohorts. Katai also flags gross-margin risk as conventional grocers sharpen pricing, citing field work showing DG narrowing its basket gap versus WMT to ~400 bps in April from ~700 bps in February, partly CPG-funded but also reflecting added price investment.
DRI: KEYBANC RAISES PT TO 228 FROM 226, MAINTAINS OVERWEIGHT INTO FISCAL YEAR-END
KeyBanc’s Christopher Carril nudged his Darden Restaurants PT to $228 from $226, reiterating Overweight. Drawing on proprietary Key First Look card data and peer read-throughs, Carril expects DRI to maintain solid top-line momentum, including +4.1% consolidated same-restaurant sales, as FY26 closes. On costs, he continues to monitor energy and beef prices but sees little incremental beef risk in F4Q. He trimmed estimates slightly while flagging higher Olive Garden and LongHorn SRS, and views the ~17x CY27E EPS valuation as reasonable versus history.
THO: CITI LOWERS PT TO 82 FROM 100, MAINTAINS NEUTRAL; CUTS WGO TO NEUTRAL ON RV WEAKNESS
Citi lowered his Thor Industries PT to $82 from $100 while maintaining a Neutral rating, signaling continued caution on the RV cycle. The firm’s recent recreational vehicle dealer checks indicate a “persistently challenged” retail environment with no meaningful near-term recovery expected. Citi believes the macro uncertainty and higher gas prices are adding to a challenged backdrop for the industry. In a related action underscoring sector softness, Hardiman also downgraded peer Winnebago (WGO, off-coverage) to Neutral from Buy, cutting that PT to $30 from $46 (WGO closed at $29.75). The paired moves point to deteriorating demand and pricing visibility across the powersports/RV complex, a relevant read-through for LCII and PATK on the supplier side.
AUTO DEALERS: UBS INITIATES COVERAGE — BUY ON AN, SAH, LAD; NEUTRAL ON KMX, GPI
HD: GOLDMAN FLAGS F1Q26 READ THROUGHS POINTING TO FLAT R AND R AS HOUSING HEADWINDS PERSIST
Goldman says Home Depot and Lowe’s F1Q26 results reinforce expectations for flat R&R activity, the firm notes, with both flagging persistent demand weakness especially in big-ticket projects, even as plumbing, appliances, water heaters, and paint showed strength. The analyst adds the tone was consistent with the broader building products view that housing headwinds, rising inflation, and macro uncertainty are partly offset by a more resilient higher-end consumer and manufacturer innovation traction. Price continues to lead growth via higher average tickets, with the first half skewed toward ticket and transaction improvement expected in 2H, while Pro continues to outperform DIY as uncertainty limits larger projects. The firm sees volumes flat to down low-single digits for most of the year offset by similar price gains, with company-specific initiatives, capital allocation, and complex pro integration and cross-selling as key drivers of relative outperformance.
LULU +1%...nearing settlement with Chip Wilson – Reuters (link).
The two sides are discussing a deal that would expand the board by appointing two of Wilson's nominees to the board with a promise to find another mutually agreed-on director later, said the sources, who aren't permitted to discuss the private talks publicly. An agreement would also give Wilson access to Heidi O'Neill, Lululemon's incoming chief executive officer, on a regular basis, the sources said. In return Wilson, who owns 8.6% of the company he founded in 1998, would promise not to badmouth Lululemon publicly or privately for roughly two years while his ownership stake would be capped at around 10%, the sources said. But they also cautioned that no deal is guaranteed.
EARNINGS CALENDAR
