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Delta Air Lines, Inc 1QFY24: Revenue +6%, Adj Op Income +17%

Delta Air Lines, Inc 1QFY24: Revenue +6%, Adj Op Income +17%

Delta reported that consumer spending on services recently passed goods for the first time in 5 years, and there is a runway for spending on services to increase further. Management reported that its core consumers are in a healthy position and travel remains a top purchase priority with generational shifts & evolving consumer preferences driving secular growth in premium experiences. Also, business travel demand has taken another meaningful step forward this year with growth accelerating into the mid-teens y/y as people blend leisure & business trips. Finally, management reported a nice run of weather broadly across its system & the country.

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Foot Locker 4Q23 Comps -0.7%, Gross Margin -3.5%

Foot Locker 4Q23 Comps -0.7%, Gross Margin -3.5%

Foot Locker’s top-line trends accelerated meaningfully from 3Q23, led by ongoing progress in conversion rates as customers responded to strong assortments & digital/in-store incentives.  Management further reported that it entered 2024 with solid momentum despite a dynamic macro & retail market.

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Levi Strauss & Co 1QFY24: Middle-Income Consumer Rebound

Levi Strauss & Co 1QFY24: Middle-Income Consumer Rebound

Levi Strauss feels better about consumers than it did 3-6 months ago, and the company gained share with 18-30-year-olds & the important middle-income demo (the largest target market in its denim category). The company also noted that it continues to outperform the category with regard to higher-income consumers, demonstrating its successful efforts to elevate the brand.

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Walgreens 2QFY24 Total Revenue +10%, Adj Operating Income -26%

Walgreens 2QFY24 Total Revenue +10%, Adj Operating Income -26%

Walgreens expects a challenging FY24 retail backdrop, with comp sales projected to decline -3% y/y. Management reported that shoppers are making deliberate choices to seek value, resulting in channel shifting behavior. The company is responding to these market dynamics by making investments in key value items & focusing on its capabilities to engage with customers in a targeted way.

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Conagra Brands, Inc 3QFY24: Organic Sales -2%, Adj Gross Margin +0.5%, Adj Op Margin -0.5%

Conagra Brands, Inc 3QFY24: Organic Sales -2%, Adj Gross Margin +0.5%, Adj Op Margin -0.5%

Conagra Brands reported 9 months of “elongated” volume recovery & expectations for a continued sequential volume improvement during 4QFY24 helped by its cautious brand investments. Management has been watching the consumer for their readiness to re-establish typical behaviors & is investing to nudge them along as they see increasing signs of readiness. The company also reported value-seeking behaviors with a trade-down from fresh vegetables to frozen & canned vegetables and a little bit of weakness in food service traffic.

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Home Depot’s Housing Market Insights

Home Depot’s Housing Market Insights

Home Depot reported that homeowners have done exceptionally well as home prices have appreciated faster than expected since the 2008 financial crisis while incomes also have strongly increased over the last 3-5 years. While consumers have pulled back on home improvement projects because of sharp interest rates hikes over the last couple of years, the chain’s -3.2% y/y FY23 comp decline should improve to -1% during FY24 as interest rates hopefully subside.

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Lululemon Athletica Inc 4Q23 Revenue +16% Y/Y, Comps +12%

Lululemon Athletica Inc 4Q23 Revenue +16% Y/Y, Comps +12%

Lulu reported a slower start to FY24 because of a shift in U.S. consumer behavior. The company guided towards 1Q24 revenue growth of +9% to +10% y/y, with a flat gross margin, and full-year FY24 revenue growth of +12% y/y ($10.7 to 10.8B range) which was lower than the $11B consensus, causing LULU shares to sharply decline.

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