Just after an overall optimistic performance period, retail stocks after Thanksgiving will usher in the holiday shopping season, under the double positive, the US stock retail sector has been strong recently.

According to the report of Zhitong Financial APP, stocks that can benefit from the sustained "consumption downgrade" have risen to varying degrees in the past earnings season.$Walmart (WMT.US)$Rose more than 6% on the first trading day after the announcement of the results; clothing retailers$Ross Stores (ROST.US)$Also because of optimistic performance guidance rose by more than 15%.

It is worth mentioning that the retail stocks that have risen best are not retail supermarkets such as Walmart Inc and Costco Wholesale Corp, but belong to$Burlington Stores (BURL.US)$、$Gap Inc (GPS.US)$, Ross Department Store and other clothing retailers.

However, the survey shows that American consumers are facing a "consumption downgrade" in the face of high inflation, and it remains to be seen whether the "Black five" will continue to boost the retail sector.

High-end consumer goods did not live up to expectations. Target Corp became a loser in retail stocks.

The second largest retailer in the United States$Target (TGT.US)$It fell 13% after the results, the biggest drop in nearly half a year, as the company halved its third-quarter profit and cut its sales and profit guidance for the year-end shopping season. CEO warned consumers that they were increasingly affected by inflation, interest rate hikes and economic uncertainty.

For the upcoming year-end holiday season, Target Corp executives bluntly expect comparable sales to fall in the last three months of this year compared with the same period a year earlier, for the first time in nearly five years. The company announced plans to cut costs by $2 billion to $3 billion over the next three years, but gave no details, saying only that "extensive layoffs or hiring freezes are not included in the current plan."

Target Corp said that the strong purchasing power of US consumers is gradually putting on the brakes. The purchasing power of household goods, sporting goods and household electronics has begun to lag, and sales of toys, including toys, have been very disappointing during the holidays. Many consumers have been using savings and loans to shop.

It is reported that unlike Walmart Inc, Target Corp is not deeply involved in the field of essential consumer goods, but under the trend that consumers' purchasing power is shifting to such goods, the company is trying to gain more business markets through beauty products, food and beverages and other essential commodities with strong market demand.

This is similar to the shift in US consumers' spending habits, with October data released by the Commerce Department showing a similar shift: spending on necessities such as groceries, gasoline, dining out and personal care increased, while spending on non-necessities such as hobbies, electronics and general goods has declined.

Walmart Inc Cheng represents the downgrade of consumption and the necessary consumer goods as the main line of the plate

$Walmart (WMT.US)$The situation is different. Since most of its sales come from necessities such as groceries, Walmart Inc raised his overall forecast for this year after an unexpectedly strong performance in the third quarter, saying that high-income consumers are driving the company's market share growth. In order to attract more consumers, Walmart Inc's Sam's Club Store and$Costco (COST.US)$There has been a fierce price competition in the consumer market for hot dog food.

John David Rainey, chief financial officer of Walmart Inc, said on the earnings call that American shoppers have a tight purse and are increasingly focused on cheap goods amid a sharp decline in disposable income.

The way American shoppers spend has changed dramatically, Rainey said. They are now focusing on cheap food, such as hot dogs, beans and peanut butter, rather than higher-priced meat.

Therefore, this kind of rigid demand for consumer necessities and the consumption downgrade caused by the soaring cost of living are of great benefit to the consumption of low-end necessities.

Therefore, Citic Construction Investment believes that there is certainty on the demand side of American dollar stores that operate low-end necessities of life. At the same time, with Thanksgiving and Christmas approaching in the United States, the increase in demand for products with rigid holiday demand will also produce a strong catalyst for the performance of dollar stores in the United States.

Major dollar store brands in the United States include$Dollar Tree (DLTR.US)$、$Dollar General (DG.US)$Stores cover a wide range of stores, providing low-cost goods through low-cost operations and convenient services for low-income groups. The customer group of the dollar store is the low-and middle-income group, and the marginal propensity to consume is higher, so the effect of consumption subsidy is obvious during the epidemic, and the sales of the dollar store increases obviously.

Affected by high inflation, consumption is "sluggish" in peak season.

Only 20% of consumers said they planned to shop on Black Friday this year, down from 60% in 2015, according to PricewaterhouseCoopers. Instead, the discount season will last throughout the fourth quarter of this year. Many retailers launched promotions ahead of schedule this year. Target Corp and Walmart Inc launched promotions in early October, and Amazon.Com Inc also launched new Prime promotions in the same month.

Early promotions boosted US retail sales by 1.3 per cent month-on-month in October, the highest level since February.

But high inflation still casts a shadow over the coming shopping season. Overall sales of US retailers are expected to grow 4.5 per cent year-on-year this holiday season, while real sales could fall 1.2 per cent after adjusting for inflation, according to S&P Global Inc. market data.

Goldman Sachs Group's holiday shopping plan survey of 1000 US consumers shows that 46 per cent of consumers plan to spend less. The bank believes that it is expected to excel in specific areas of the consumer market, including companies offering significant discounts, as respondents say they are "willing to buy lower / quality products at lower prices" under high inflation.

There are also pessimistic data. A survey of US consumers by Deloitte Consulting's Holiday Retail Survey this year shows that in the upcoming holiday season, US consumers plan to buy nine gifts this year, up from 16 last year.

Jeffery's October survey showed that consumer financial pressures caused by grocery spending and expected further inflation were causing consumers to consider trading less and buying less goods. While the food and grocery industry reported relatively robust results in the third quarter, it believes there will be risks if consumers start to boycott higher-priced goods more forcefully.

But in addition to necessities, there is also a relatively optimistic view on the retail sector. Greg Melich, a retail analyst at Evercore ISI, said that the holiday shopping season may help retailers who are still dealing with inventory expansion, although market expectations for the holidays are more moderate, but many shoppers still plan to go to the store to look for suitable gifts.

Sales and profit can only be chosen from one of two?

In addition to weak sales, retailers are under pressure to get rid of inventory. Morgan Stanley analysis said that retailers inventory pressure is too great, American consumers may not be able to fully digest excess inventory.

Soaring inflation has forced American consumers to spend more on necessities, leaving many stores with a large backlog of surplus products, leading retailers to lower prices at the expense of profits.

Morgan Stanley pointed out that if retailers do not significantly reduce prices, I am afraid that retailers will have to bear the cost of too much inventory, but a sharp price reduction will put pressure on corporate gross margins and aggravate the slowdown of profit growth.

For this holiday shopping season, BI research analysts pointed out that holiday sales will be boosted by rising prices, but retailers' profit margins are likely to be curbed in an environment of strong promotions.

Wall Street tells you what to buy for "Black five"

On the whole, Walmart Inc won the unanimous favor of Wall Street. Since Walmart Inc usually earns about 55 per cent from necessities such as groceries, the changes in consumer habits announced in the US will benefit companies represented by Walmart Inc.

In addition to Walmart Inc, American Dale, Costco Wholesale Corp and other stocks are also expected to benefit from the continued "consumer downgrade", and strong consumable products are expected to support future sales trends.

Jeffery believes that food and beverage companies with exposure to their own brands in lower categories will do well, as will food and beverage companies that have strong influence in a variety of retail channels and can meet a wide range of consumer needs. In these respects, the bank is optimistic that$Mondelez International (MDLZ.US)$和$Hershey (HSY.US)$。

Raymond James believes that even if there is a possible recession, the undervaluation of some retail stocks still brings good investment attraction. The bank is strongly bullish.$Home Depot (HD.US)$On the grounds that its share price is 15% cheaper than its cost-to-earnings valuation.

Piper Sandler is optimistic about American department store retailers.$Nordstrom (JWN.US)$. However, the bank believes it may be too early to bet on retail stocks because inflation is still relatively high at historical levels. Many Wall Street analysts worry that the Fed will be forced to continue to tighten, which could lead to a recession in the United States.