Robert W. Baird Consumer Coverage Highlights from Baird's 2016 CTS Conference - Consumer
Summary. We highlight broader thematic takeaways across Baird's inaugural Global Consumer, Technology & Services Conference, organized by research vertical. Please contact your sales representative or the individual analyst(s) for additional information.
Softline Retail. The environment remains challenging but late-May/early-June traffic improvement and generally easier 2H16 comparisons should support sequentially improving trends and lift sentiment. Demand remains strongest in beauty & active and weakest in apparel as a ‘relatively healthy’ consumer reprioritizes spending (wallet-share, channel shifts). Retailers remain focused on differentiating their brands and shopping experiences to engage consumers in a rapidly evolving competitive landscape (Amazon).
Consumer Leisure/Automotive Services. The price of oil remains a pivotal variable for our powersports and automotive services coverage, with mixed implications. Lower gas prices have fueled more driving and more accidents, benefiting our collision coverage – but weak energy markets have deflated demand for off-road vehicles (ORVs) in key markets.
Active Lifestyles. We sensed a more positive tone regarding overall retail patterns in the past several weeks as more seasonal weather arrived. We view this as an encouraging indication that softer retail trends in April and early May may have been more tied to transitory weather impacts than a broad-based pullback in consumer spending. Other takeaways largely were brand-specific.
Hotel Brands. Hotel brand management teams remain optimistic that the current industry upcycle will continue for the near-to-intermediate term, albeit at a more moderate rate of growth. The hotel brands remain focused on incentivizing loyalty members and retraining their customers to book through direct channels as the brands work to combat the OTAs and repricing software.
Restaurants. The tone on recent industry demand was somewhat mixed, with some chains indicating comfort with underlying fundamentals and others signaling some recent softness (partly due to weather and/or company-specific factors). Labor inflation remains a key theme, with chains expecting to mitigate structural increases with pricing actions and productivity enhancements (i.e., technology).