As more U.S. retail giants get set to report earnings this week, the CEO of IG North America says he’s interested to see which types of retailers saw the most consumer traffic in recent months.
“Will this be a good season for stocks like Dollar General as compared to maybe stocks like Macy’s, where people aren’t buying as high-end of goods, they’re trying to look to save money where they can,” JJ Kinahan said in an interview with BNN Bloomberg on Monday.
“For those stores that list prices that are just a bit lower or are considered maybe a step down in quality, this could be a fantastic time for some of them.”
Kinahan added that high-end retailers typically do well no matter the macroeconomic backdrop, but mid-tier sellers like Macy’s or Target may suffer as many U.S. consumers remain cash-strapped.
Walmart, the biggest of all U.S. retailers, said last week that it was raising its sales guidance for the full year, as it expects to continue luring more shoppers in search of deals.
“Walmart (was) talking about the fact that they were seeing great demand from clients; some of the areas they saw demand included food, which we know has been, worldwide, a place where we’ve seen prices increase significantly,” Kinahan said.
“I think that goes exactly to what I’m saying. I’m also interested to hear in the back-to-school market what these companies have to say about how demand has been.”
Kinahan said that despite consumer weakness in some areas, this U.S. earnings season has been “very strong.”
“We see almost 10 per cent growth with 91 per cent of the companies reporting – that’s really impressive overall,” he said.
“This is really a time that people should be celebrating in many ways because we have seen such strong growth.”