8:19:07 AM
Source: Bloomberg Intelligence
The latest retailer and homebuilder results once again highlight a bifurcation between affluent US consumers, who continue to spend robustly, and the less well-off.
The split is particularly pronounced in housing. A new home is a luxury good and any home at all has become increasingly expensive. The highest-end of the publicly-traded US homebuilders — Toll Brothers — is rallying the most since June 2020 after better-than-expected results.
Strikingly, the company says it kept raising prices in the past month (the average price per home in Toll’s backlog was $994,700 in the quarter ending April 30, up from $860,100 in the past year, topping an existing home at ~$400,000), and its backlog is strong. It’s worth noting as well that 20% of Toll’s buyers pay with all cash. That compares with a total of 26% for all cash for existing homes, and 17% for investor purchases.
Retailers and big banks show a similar pattern. Department store Nordstrom is jumping after boosting its revenue and earnings outlook as wealthy shoppers are likely insulated from inflation. Sporting-goods retailer Dick’s is climbing too, after saying it doesn’t see significant risk of markdowns. That follows an earlier beat from Ralph Lauren, and bullish comments from top bankers BofA CEO Brian Moynihan in Davos and Jamie Dimon at JPMorgan’s investor day.
The S&P 500 climbed in morning trading, led by consumer discretionary stocks, with Tesla and Amazon in the lead by value. Energy and financials gained as well.