Last week, I highlighted comments from online furniture retailer Wayfair, where executives said that interest rates were biting hard:
“Q2
was a dynamic quarter that resulted in another period of share gain,
amid continued macro headwinds that are pressuring the ways customers
are shopping the category. Customers remain cautious in their spending
on the home, and our credit card data
suggests that the category correction now mirrors the magnitude of the
peak to trough decline the home furnishing space experienced during the
great financial crisis,” said Niraj Shah, CEO, co-founder and co-chairman.
Today, it’s composite decking company Trex, whose shares plunged 21% on earnings. Here is what the CEO said:
So, the slowdown from an entry-level perspective, I kind of break our customers into three different levels. It’s more of the lower-income that’s not heavily engaged with Trex in buying composite decking. And then you have the next two-thirds. You’ve got that middle- range customer and that higher-end customer. And up until the June timeframe, that middle range and the upper customers were doing pretty well. As we got into June and July, we started to see those mid-level customers, and consistent with what other data we’re seeing out there started, to struggle and started to see that pull back as well too.
To be fair, everything around housing has been slumping for awhile but Disney today also reported on poor spending at theme parks and hotels, restaurants and airlines have been sounding alarms. I think there is an increasingly clear trend and I suspect we will see or the same from other retailers.
Some other comments from the TREX call:
- “We did see the performance as we moved through the month of June. We did see a decline as the month went on. And in the month of July as well, we saw a weak performance.”
- “Your lowest end products are going to be the weakest, the midrange are going to be less weak, and then we’re continuing to see strength in the higher end”
- “Now, we see that the market is not going to grow at that level, there is going to be an adjustment.”
- “We’re seeing accelerated weakness in the entry-level product category”
This article was written by Adam Button at www.forexlive.com.
Source link
