JBH –0.99%: Had pre-guided this result so it was all known given their recent upgrade. The conference call provided some more insight into a few talking points in retail land:
- Inventory: They have minimal old stock and inventory in line with sales run-rates.
- Supply chain: They have flexibility over months not weeks where supply chain issues arise. Forecasting market to remain where it is at for a while – didn’t really address it succinctly.
- Traffic: CBD traffic still down – wages and rent the main costs, they are managing labour but rent more difficult – annual increases in them and linked to inflation (good for landlords!)
- Recent trends: 4Q22 very strong with traffic returning – as soon as stores re-opened, almost back to 100% quickly to where it was pre-COVID.
- Prices: Price increases have “stuck” and maintaining key price points. Suppliers are very fixated on market share and will adjust accordingly.
- Strong sales vs. weaker consumer confidence – how do you reconcile this? Deliver what customer wants instore = service, which they are confident in delivering.
All in all – a decent update from JBH, they had run ~20% higher into today’s results so not a new catalyst to push it up, BUT, good retailers are surviving, and some are actually thriving – think Lovisa (LOV)!
MM is neutral JBH ~$45, but on the bullish side into pullbacks
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