Staycation or Vacation?

As part of round three of opening up after covid, I expected people to get out of the house and start traveling again.  Mind you, people have been traveling, but we haven’t seen a return to the pre-pandemic levels just yet.  With more countries opening their borders, my theory was that people would shrug off the cost of travel and go enjoy the summer months in locations that may have been closed off or more difficult to get to over the last two years.

Certainly, we saw earnings from the airlines like Delta Airlines (DAL) agree with my theory as they projected an uptick in travelers this quarter.  Some of the other travel plays like Airbnb (ABNB) also projected a strong summer.  

But let’s just take a step back and look at what we saw from retail numbers last week.  Walmart (WMT) and Target (TGT) announced that the number of customers is steady, but their data is showing that consumers are trading down to the lower-priced items vs some brand-name staples.  If people are altering their shopping habits, does that mean summer travel is off the table now?  

Or maybe in an odd way the retail numbers support the travel theory.  Instead of spending money on things, people are still willing to shrug off higher costs to buy experiences.  A mentor of mine often talks about one key to happiness is through experiences over things.  

Going out for experiences doesn’t mean traveling far.  After all, who wants to travel after we saw more than 2,800 canceled flights over the weekend because airlines are short-staffed in one key area – pilots!  

The EU banned Russian oil, which sent prices soaring to a 1.5-month high, which is sure to raise the cost of traveling to distant destinations.  How do you still go on vacation without going anywhere?

Numerous stories are coming out about going on a staycation rather than a vacation.  You can still visit with family and friends, but you don’t have to travel.  

Either way, staycation or vacation, If you’re going to go explore the world or your own backyard with family and friends, you need to make sure you’re looking good, right?

That got me thinking about companies in the specialty retail industry.  Companies that focus more on clothing and beauty products.  What do the numbers say about spending in those industries?

Today’s trade ideas are in the specialty retail industry.

First I wanted to see how clothing companies like Stitchfix (SFIX) are doing.  As long as people are working from home the majority of the time, the subscription-based clothing retailer has hit headwinds that it can’t seem to clear.  

Sales have actually increased year-over-year for the past five years in a row, but earnings-per-share has yet to recover to positive levels.  The company lowered guidance for the rest of the year, citing the difficulty to onboard new clients.  The only good news is that spending per existing client is on the rise with the launch of their Freestyle service.

Stitchfix (SFIX)

Likewise, The Gap (GPS) has been struggling to break out of its downtrend from May of 2021.  They cited similar issues – difficulty finding new customers led to deeper than normal discounts combined with increased costs.  

Stitchfix (SFIX)

Ok, so people are not spending money on clothes… got it. 

Then I came across Ulta Beauty (ULTA).  People are still spending money on beauty products.  Ulta CEO, David Kimbell said, “Consumers continue to be highly engaged with the beauty category as they participate in more in-person activities, engage in more travel, and lean into experiential spending,”  It doesn’t matter if you’re doing a vacation or a staycation, people are still interested in beauty products.

ULTA had earnings last Friday and shares popped over 12% on news that sales climbed 21% year-over-year and in-store traffic rose 10%.  Their average ticket price rose by 7.3% as shoppers spent more per visit.  We’ve seen this with some other retailers as well.  One theory is that consumers are making fewer trips to conserve gas, but spending more per trip.  

Ulta

Another company to look out for is The Beauty Health Company (SKIN).  SKIN’s CEO has worked for several big-name brands, one being Kylie Jenner Beauty, Unilver, and Loreal.  Their Chief Experience Officer worked at Google and Target.  

SKIN’s main brand is HydraFacial, which claims to cleanse skin deeper than traditional microdermabrasion.  They recently unveiled an upgrade to their HydraFacial system, called HydraFacial Syndeo.  This new delivery system is connected to the cloud, allowing providers to see consumer history and preferences.  

The company has an interesting story with long-term growth prospects and is currently on a watch list of mine for Wealthy Investor Society for a possible upcoming issue.  

 

Skin

It’s currently trading around $14 and its 50-day moving average is around $20.  Its 52-week high sits around $30.  The overall market is still bearish, despite the rally from last week.  But if beauty stocks continue to deflect inflationary pressures, we could see a bounce in this stock.

 

If you have any questions, comments, or anything we can help with, reach us at any time.

 

Jeff

Guest Writer, Filthy Rich, Dirt Poor

Editor, Wealthy Investor Society

Jeff

Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society

Is The Stock Market Cycle Pointing To A New Bull Market Already?

Is The Stock Market Cycle Pointing To A New Bull Market Already?

memberswis
On February 6, 2023

February 7th, 2023Is The Stock Market Cycle Pointing To A New Bull Market Already?Are we in another bear market rally or the start of something new? That’s what everyone wants to know, especially as we

Job Creation Shocks The Market

Job Creation Shocks The Market

jeffwood
On February 5, 2023

February 6th, 2023Job Creation Shocks The MarketIf we’re heading into a recession, how were we met with better-than-expected job growth numbers last week? Unemployment dropped, despite the headlines of tech companies planning to lay off

Job Cuts And Stock Buybacks Keys To Success In 2023

Job Cuts And Stock Buybacks Keys To Success In 2023

memberswis
On February 2, 2023

February 3rd, 2023Job Cuts And Stock Buybacks Keys To Success In 2023 The thing I’ve learned from this earnings season is that a company can have consecutive quarterly drops in revenue and provide a lower

Fed Raises Rates But Bulls Are Still In Control

Fed Raises Rates But Bulls Are Still In Control

memberswis
On February 1, 2023

February 2nd, 2023Fed Raises Rates But Bulls Are Still In ControlOk, bulls. You win.  I will start lifting my bearish stance on the market.  Despite the final 10-minute market sell-off and a Dow that finished

What Past Fed Announcements Tell Us The Market Will Do Today

What Past Fed Announcements Tell Us The Market Will Do Today

jeffwood
On January 31, 2023

February 1st, 2023What Past Fed Announcements Tell Us The Market Will Do TodayWatch out - this article is going to have some math.Here we are once again on Fed Announcement day. Most of the folks

The Hidden Profits Of 2023

The Hidden Profits Of 2023

jeffwood
On January 30, 2023

January 31st, 2022The Hidden Profits Of 2023There is still one more trading day left in January, but if the adage “as the S&P 500 goes in January, so goes the year” holds true, the markets

The Fed Goes Up Against Earnings This Week

The Fed Goes Up Against Earnings This Week

jeffwood
On January 29, 2023

January 30th, 2022 The Fed Goes Up Against Earnings This Week We are in peak earnings season with some heavy hitters like Pfizer (PFE), Snap (SNAP), Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL), and Apple

Smoother Sailing in 2023

Smoother Sailing in 2023

user
On January 18, 2023

January 17th, 2022Smoother Sailing in 2023 Nothing has changed since the end of 2022, yet traders have already decided that this year won’t be as bad as the last. Bulls have been piling into stocks

The Rise Of Bing Over Google – That’s No Joke

The Rise Of Bing Over Google – That’s No Joke

jeffwood
On January 12, 2023

January 12, 2023 The Rise Of Bing Over Google - That’s No Joke Before we talk about two tech giants getting ready to battle it out once again, let’s look at the overall market. The

Why I Ignore Most Of The News

Why I Ignore Most Of The News

jeffwood
On January 8, 2023

January 9th, 2022 Why I Ignore Most Of The News It’s easy to get caught up in the financial headlines. I’ve certainly done it. Last week shows why I ignore most day-to-day stories. I know

PREV NEXT
Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.