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Sysco Corporation 3QFY24 Gross Profit Was Up +5.2% Despite a Soft Macro Environment

Sysco Corporation 3QFY24 Gross Profit Was Up +5.2% Despite a Soft Macro Environment

Sysco (food distributor) reported that it was able to deliver strong 3QFY24 profit growth despite negative restaurant traffic trends by profitably taking market share. In any case, Sysco expects that restaurant operators will eventually make the connection between higher menu prices (previously needed to cover cost inflation) and depressed foot traffic. Notably, U.S. Broadline inflation was up +1.2% during the quarter & management expects a normal rate of inflation in line with historical averages going forward.

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PepsiCo, Inc 1Q24: Low-Single-Digit Top & Bottom-Line Growth on Top of Strong 1Q23 Results

PepsiCo, Inc 1Q24: Low-Single-Digit Top & Bottom-Line Growth on Top of Strong 1Q23 Results

PepsiCo reported that the global consumer is very resilient, bolstered by very low unemployment & wage growth that exceeds inflation. However, 2 areas of concern include Chinese consumers who are substantially increasing their savings rate & lower income consumers in the U.S. who must strategize their budgets to get to the end of the month. Pepsi is pivoting its commercial plans & innovation to provide stretched consumers with the right innovation & value in different parts of the month through different channels.

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ManpowerGroup Inc 1Q24: Revenue -7%, EBITA -38%

ManpowerGroup Inc 1Q24: Revenue -7%, EBITA -38%

ManpowerGroup reported that labor markets are cooling in North America & Europe yet remain strong. While surveyed employers reported increased caution in their hiring due to economic uncertainty, business leaders feel optimistic about the future which is why demand remains strong for some skilled workers & talent shortages persist despite a cooling broader environment. In any case, management noted that 23 consecutive months of temp worker declines in the U.S. without a recession or a significantly cooling economy is unprecedented.

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United Airlines Holdings 1Q24: Strong Air Travel Demand Persists

United Airlines Holdings 1Q24: Strong Air Travel Demand Persists

United Airlines’ 1Q24 passenger revenues increased +10% y/y, primarily driven by a +9% increase in available seat miles (capacity). Premium revenues were up +14% y/y on a +10% capacity increase and the company believes that its premium revenue streams lead the industry. Notably, the company’s recent rollout of Basic Economy service drove a +35% y/y increase in Basic Economy sales during the quarter. Managed corporate travel revenues increased +14%, reflecting a strong business traffic rebound. The grounding of its fleet of 79 MAX 9 737s cost -$200MM in 1Q24 earnings.

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D.R. Horton 2QFY24: Well Positioned with Low Cost Houses in a Difficult Market

D.R. Horton 2QFY24: Well Positioned with Low Cost Houses in a Difficult Market

D.R. Horton reported that although inflation & mortgage interest rates remain elevated, its net sales orders increased +46% sequentially from 1QFY24 and +14% y/y as the home builder is well-positioned with affordable home offerings and a flexible lot supply at a time when the competitive supply of both new & existing homes at affordable price points is still limited and demographics supporting housing demand continues to be favorable.

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Sportsman’s Warehouse Holdings 4Q23 Comps -12.8%, Adjusted EBITDA -81.5%

Sportsman’s Warehouse Holdings 4Q23 Comps -12.8%, Adjusted EBITDA -81.5%

Sportsman’s Warehouse Holdings reported that consumers dealing with macro pressures were focused on promotional activities and entry-level & mid-price points during the holidays. However, management indicated that the chain did not suffer from the industry’s mix decline during March and that it has been able to gain share as competitors walk away from the business.

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CarMax 4QFY24: Fifth Consecutive Quarter of Y/Y Retail Used Unit Growth

CarMax 4QFY24: Fifth Consecutive Quarter of Y/Y Retail Used Unit Growth

CarMax reported that while used car prices have moderated, persistently high-interest rates continue to pressure consumers who are currently seeking to make ends meet by focusing their spending power on inflated food & housing necessity purchases. Management further reported that while tax refunds were higher this year, the number of refunds was lower & also that sales from customers making less than $3,000 a month have been the most impacted by high-interest rates.

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