This passage, from the Walmart results call, seems quite relevant for stocks like WES, CCX, BRG, HVN, relative to COL and WOW.
Food inflation causing a cut back in demand for clothes, given a declining real wallet, type thing.
We’ve been expecting this for some time, viewing the inventory builds across the consumer discretionary names as a key red flag, and expect material write downs (discounting) are required to move them.
Either way, the choice, in our mind, is “hammer your margins or hammer your cashflows”, hence we remain underweight the sector.
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