Retail sales rose 4.1% in December on a year-over-year comparison and 0.6% on a monthly view. Retail sales showed some acceleration from the pace seen in November.
Department stores, restaurants and electronics stores all showed drops during the month, while the nonstore retailer category [Amazon (NASDAQ:AMZN), eBay (NASDAQ:EBAY), etc.] and the auto-related categories were strong.
Keep an eye on Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) after the general merchandise store category surprised with declines of 0.5% M/M and 2.8% Y/Y in December.
For calendar year 2016, retail sales were up 3.3% to top the 2.3% pace seen in 2015.
Goldman Sach breaks down the impact of a "destination-based" tax on consumer staples companies.
The GS team forecasts a 9% EPS benefit from Trump/GOP tax policies (25% corporate rate, repeal of interest expense deduction, repatriation tax at 8.75% with proceeds going to buybacks) and a 6% EPS gain if the destination-based tax proposal is part of the final plan.
Constellation Brands (NYSE:STZ), Hershey (NYSE:HSY) and Mondelez International (NASDAQ:MDLZ) are seen as three companies within the staples sector that would be impacted the most on the negative side from the destination tax.
On a broad look at tax implications, GS sees benefits for Dean Foods (NYSE:DF), Monster Beverage (NASDAQ:MNST), Reynolds American (NYSE:RAI) and Energizer Holdings (NYSE:ENR).
The Federal Reserve meeting isn't the only show in town today.
Producer prices and industrial production warrant attention, but the retail-sales report, which will capture activity at the beginning of the all-important holiday season, is the one that really matters.
It could give further proof that the economy is doing well enough to support a more hawkish Fed next year.
Deutsche Bank warns that the party is over for consumer staples stocks.
The investment firm smacked Dow 30 stocks Procter & Gamble and Coca-Cola with downgrades to Hold on broad macro factors (F/X,USD, stronger economy = flight out of safety) that could apply to a host of multinational consumer staples sellers (KMB, MDLZ, PEP, PMCL, CLX).
Starbucks (NASDAQ:SBUX) CEO Howard Schultz delved into some interesting large-scale retail issues during the company's earnings call yesterday.
Schultz first noted that FedEx CEO Fred Smith shared some research with him confirming the significant drop in store traffic globally amid the 'Amazon Effect" across industries -- before he really turned up the retail bear rhetoric.
"There's no doubt that over the next five years or so, we are going to see a dramatic level of retailers not be able to sustain their level of core business as a traditional bricks-and-mortar retailer, and their omni-channel approach is not going to be sustainable to maintain their cost of their infrastructure."
So where does that leave Starbucks? Schultz thinks a shrunken retail landscape leaves Starbucks as a place where people will want to gather for human contact.
"We are going to be in a very unique position five years, 10 years down the road because there's going to be a lot less people competing for those customers. I'm not talking about the coffee category; I'm talking overall."
Cowen analyst John Kernan has some tough words for retail executives after hearing a litany of excuses on earnings conference calls about the "challenging" environment.
"Every metric related to the consumer is healthier now than it was the past couple years," says Kernan. "The consumer is in a very good position right now," he adds.
Low gas prices, low unemployment rates and some wage gains have set the table for growth, but a decline in consumer confidence (political anxiety?) has sent even more shoppers to online channels or kept them in a stay-at-home mindset (see restaurant sector woes).
A question left unanswered is if the shift is transitory in nature or permanent An even bigger uncertainty is what happens to brick-and-mortar retailers if the U.S. economy were to enter a recession?
The NPD Group forecasts holiday spending will increase 3.6% to $636 per consumer.
"The unvarying holiday spending intentions expressed by consumers are a sign that even this year’s intense election cycle has done little to dampen consumer confidence going into the holiday season, which we forecast to grow moderately," notes NPD analyst Marshal Cohen.
There has been some level of expectation that many retailers are going to point to election anxiety as a reason for their own disappointing earnings.