Huge earnings week for the mall! Furniture stocks burning!
August 25, 2025
It's the last week of summer and the biggest week of the year as retail earnings hit maximum intensity in the next 5 days. Here's what I'm watching while most of the other adults are on vacation:
1. The Earnings Flood Begins
We heard from Walmart, Target and Home Depot all week. Short Form: Inflation is coming in the back half (but hasn't been bad thus far) and the consumer is still showing up for good companies ($TJX). Now that the Big Boys are out of the way, there will be the typical deluge of lesser-followed retailers of every stripe and level of quality.
On Wednesday alone, we hear from Kohl's, Abercrombie, Williams-Sonoma, Urban Outfitters, and Five Below.
These are volatile stocks reporting during one of the quietest weeks of the summer. There will be outsized money-making opportunities. I'll be here digging for them. It should be a great week to find trades.
2. Furniture Tariffs: The POTUS Giveth and Taketh Away
Friday afternoon, just hours after Jerome Powell was pressured into signalling a September rate cut, the white house announced a tariff carve out for furniture. Williams-Sonoma ($WSM), Wayfair ($W) and RH ($RH), which import a huge % of products from China, all saw their shares hit hard after hours.
On the surface, the biggest impact will be on Wayfair, which imports basically everything. Williams-Sonoma has a reasonably diverse supply chain, but will undoubtedly see margin pressure. WSM reports on Wednesday and has one of my favorite CEOs in all of retail.
I'll have a WSM breakdown and report card after the report. In the meantime, watch the follow-through for these furniture three names Monday. $RH, $WSM and $W are all down pretty hard early.
3. The Denim Trend!
The five biggest sellers of denim in the United States, in order: Levi Strauss, Kontoor Brands (makes Wranglers and Lee), the Gap, American Eagle, and Abercrombie and Fitch. AEO is next week.
Denim is hot for fall. On both sides of the political aisle, for men and women. Not "20% growth" hot. Just better than expected. The average PE for $AEO, $GAP and $ANF is 12x. Better-than-expected sales in a core category should be sufficient to boost the shares of very cheap specialty chains set to capitalize on the uptick.
Portfolio+ members got a breakdown of my "better than expected" thesis in my weekly video last Friday. Non-members are free to enjoy Gap's Viral "Better in Denim" ad (featuring people of all ethnicities and "My Milkshake").
