MW More retailers report this week, amid signs of solid online holiday spending

By Bill Peters

Earnings Watch: Dollar stores, Ulta Beauty and Foot Locker report during the week, along with Salesforce and other cloud-services names

As a shorter holiday-shopping home stretch this year kicks into gear, more retailers - including Foot Locker Inc. and Victoria's Secret & Co. - report this week, likely offering more detail about consumer spending appetites as analysts narrow their focus on individual successes and failures from chain to chain.

Those results will land days after Black Friday and Cyber Monday, and as new data points to solid online holiday spending trends. While discounts have largely driven demand, that data also points to a greater willingness to buy more expensive things, even as higher costs of living make it harder to stay afloat financially.

Dollar stores Dollar Tree Inc. $(DLTR)$ and Dollar General Corp. $(DG)$ report, as the former chain's chief executive departs, and as dollar stores face stiffer competition from Amazon.com Inc. $(AMZN)$ and Walmart Inc. $(WMT)$ and a bigger tariff threat under President-elect Donald Trump. We'll also get results from supermarket chain Kroger Co. $(KR)$, which awaits court rulings on its merger deal with Albertsons Cos. Inc. $(ACI)$

Online pet-supplies store Chewy Inc. $(CHWY)$ and pet-food chain Petco Health & Wellness Co. $(WOOF)$, after the latter got a new chief executive this year amid efforts to cut costs and change up its product selections. Elsewhere, teen-centric discount chain Five Below Inc. $(FIVE.UK)$, whose old CEO became Petco's new one, reports after announcing over the summer that it would scale back efforts to expand.

Beauty-products chain Ulta Beauty Inc. $(ULTA)$ also reports as it deals with slowing demand. Results are due from Foot Locker Inc. $(FL)$, as it strives for deeper "sneaker connectivity. And Victoria's Secret $(VSCO)$ issues results after citing "positive signs" despite a tough backdrop over the summer. American Eagle Outfitters Inc. $(AEO)$ also reports.

Earnings reports from those companies will follow those from Gap Inc. $(GAP)$, which has benefitted from efforts to refresh its stores, and Urban Outfitters Inc. $(URBN)$, which has also shown signs of improvement, as gains from wealthier shoppers at Anthropologie counterbalance struggles at namesake stores that fell out of favor with younger consumers. Kohl's Corp. $(KSS)$, however, suffered from stocking too little of the private brands that consumers like.

Adobe on Wednesday said that from Nov. 1 to Nov. 24, U.S. shoppers have already spent $77.4 billion online, helped by demand for electronics and clothes, as well as one of the everyday purchases that has stoked anger over inflation: groceries. That figure marks a 9.6% gain from the same period last year, and is above the 8.4% growth the design and analytics firm expects for the entire holiday season.

The firm expects online spending during Cyber Week - the five-day stretch that covers Thanksgiving, Black Friday and Cyber Monday - to increase 7% to $40.6 billion.

Adobe said that that spending figures so far were driven by new demand, rather than higher prices. And even as prices overall, when measured by government data, are still higher, Adobe said by its own digital price index, prices online have fallen for more than two years.

More people were also using AI chatbots to help with shopping, the firm said. More people also showed willingness to trade up this holiday season.

"Between April 2019 and August 2024, Adobe found that the share-of-units-sold for the most expensive goods online decreased by 47%, as consumers embraced cheaper goods," it said.

"This trend reversed in the first 24 days of the holiday season: The share of the most expensive goods increased by 15.1% compared to pre-season figures, as consumers embrace everything from bigger TVs to more advanced washing machines."

Adobe on Friday said it expected shoppers to spend $10.7 billion and $11 billion online over the day, a new record.

This week in earnings

Other companies reporting this week include RV maker Thor Industries Inc. $(THO)$, Hormel Foods Corp. $(HRL)$, Campbell's Co. $(CPB)$ and Marvell Technology Inc. $(MRVL)$.

The call to put on your calendar

Ulta Beauty: When prices for basics started rising in 2022, demand for things like clothing and electronics suffered. But demand for beauty products hung in there, helped by returns to the office after the pandemic, celebrity brands and innovation in makeup. Since then, however, sentiment around Ulta Beauty Inc., which reports quarterly earnings on Thursday, has shifted.

Competition has grown in prestige beauty brands. Beauty products have become available in more places, like Sephora - which has opened shops inside many Kohl's stores. Walmart has tried to move further into premium beauty. Amazon is also a threat. The last time Ulta reported results, its shares took a hit after it cut its outlook. While some analysts saw the dip as a buying opportunity, others have since grown more concerned about the competition and a potentially messy push into online sales.

Michael Baker, an analyst at D.A. Davidson, said in a note on Wednesday that he expected Ulta Beauty to report a drop in same-store sales. Still, he said, sales growth of Sephora locations at Kohl's was slowing, as the department-store chain laps earlier gains from that rollout. Thus, he said, the pressure on Ulta, at least from Kohl's, "may be easing."

The numbers to watch

Salesforce, cloud-platform sales: Cloud sales-team platform Salesforce Inc. $(CRM)$ reports quarterly results on Tuesday. Those results will follow a 25% gain in its stock price so far this year, helped by its plans related to artificial intelligence, which include AI-driven assistants that can help with employee and customer interactions. In August, when Salesforce last reported results, shares ran higher, after the company raised its margin outlook and stuck with its sales forecast, following some expectations for a cut amid concerns about lower demand and still-tighter spending on IT. But Morgan Stanley analysts have been on the lookout for higher shareholder expectations, and a Piper Sandler analyst said the planned departure of Salesforce's chief financial officer risked creating uncertainty.

Elsewhere, Okta Inc. (OKTA), Box Inc. (BOX) and DocuSign Inc. $(DOCU)$ also report.

-Bill Peters

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December 01, 2024 10:01 ET (15:01 GMT)

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