Management commentary consistent with our promotional ensemble tracking fewer discount campaigns:
>”Abercrombie brands made sequential progress in-line with our expectations, and we are tightly managing inventory as we aim for fourth quarter brand net sales to be approximately flat to last year’s record. “
> “…keeping inventory tight while continuing to flow in newness allowing for AUR improvement on lower promotions.”
With rampant inflation continuing to chew into consumers purchasing power, we continue to see a shift away from demand for discretionary knick-knacks towards critical household staples including food and clothing. The diverging promotional growth patterns in BBWI and WMT make this trend apparent.
> BBWI forecast high single digit declines for the critical Q4 holiday quarter, noting a challenging start to holiday shopping beginning in Q3 … highly competitive environment”.
>. BBWI management’s final comment directly aligns the the email campaigns we tracked “…our customers are waiting for deeper discounts before making purchases.”
> Gross Profit Rate declined 220 basis points as management noted “increased promotional activity to clear inventory”.
> Walmart (WMT) vs Bath & Body Works (BBWI) Not all retailers are exploding their promotional campaigns and email volumes. As seen below WMT total volumes actually declined into peak shopping season as consumer preferences shifted towards cost effective core needs and away from discretionary scented candles and bubbles..
We captured explosive growth in 75% off campaigns from BBWI
Additionally BBWI was forced to grow BOGO campaigns by nearly 300%
COVID Masks and Crafts vs. Feeding the Family
ETSY: Ensemble revealed new discount campaigns ahead of reduced outlook.
WMT: Ensemble tracked fewer email campaigns, and declining promotional discounts before improved inventory position and strong outlook.
While our competitors focus on precisely tracking revenues our promotional ensemble provides a more predictive gauge of organic demand. Our technology can uncover changes in how brands communicate with customers and leads.
With the holidays in the rear-view mirror, it appears demand receded, and management responded by ramping up the implied discount language in emails. We captured more campaigns using 40% off language for specific categories. These campaigns and language had never been used before.
Persistent declining sales for the mature marketplace provides clues that consumer preferences have shifted. Gone are the lockdown and stimulus-related tailwinds driving interest in at-home crafts, masks mini calendars, dog sweaters, cute cocktails mixology and other unessential at-home items.
As food costs have spiraled out of control consumers have shifted to the perceived value provided by Walmart.
Wall Street’s ‘silo’ style of coverage creates the opportunity as one analyst covers ‘internet’ with Etsy and entirely different team covers consumer staples and Walmart. Both are now technology companies. Our sector agnostic data driven approach makes it easy to compare the two. As seen in our composite, Walmart is clearly responding to improved inventory levels and robust demand by reducing their email campaigns and discounts
Random Walk email intelligence through our promotional ensemble delivers the most quantitative and predictive tracking of implied discounts and promotional cadence available. When brands are struggling to generate organic demand they ramp up sending volume to their leads and customers. We capture these potential inflections in near real-time and alert our investor partners ahead of the street.
TOTAL PROMOTIONAL VOLUME + 9% GROSS MARGIN +460bps
STEEP DISCOUNT VOLUME +75% GROSS MARGIN: -480bps
SIGNIFICANT DISCOUNT VOLUME +127% GROSS MARGIN -370bps
STEEP DISCOUNT VOLUME +79% GROSS MARGIN: -460bps
STEEP DISCOUNT VOLUME +108% GROSS MARGIN: -160bps
TOTAL PROMOTIONAL VOLUME +650% GROSS MARGIN: -550bps
STEEP DISCOUNT VOLUME +780% GROSS MARGIN: -140bps
STEEP DISCOUNT VOLUME +107% GROSS MARGIN -110bps
STEEP DISCOUNT VOLUME-37% GROSS MARGIN 40bps
Our promotional ensemble identified the biggest outliers of the period from several weeks before Black Friday through Cyber Week for our investor partners.
Standouts with previously unseen promotions, largest risers in discount campaigns, or those with robust organic demand that were able to reduce email volumes include:
AEO, COUR, CROX, CURV, GME, HIBB, LOVE, PVH, NKE, RH, SCVL, SONO, TPX, TSCO, URBN, VFC
Our email intelligence systems have been capturing tracking and classifying emails from leading brand for nearly 7 years providing the most robust, quantitative insight into email promotional activity. i
The quickest and cheapest method for management to respond to demand inflections is to adjust its cadence and intensity of email discounts.
AMERICAN EAGLE OUTFITTERS (AEO) Both total promotional email volume and significant discounts nearly 30% lower than a year ago.
GAMESTOP (GME) Meteoric rise in BF related promotional activity with “$50 off x box” and “up to 60% off video games”.
HELLO FRESH (HLFF) Total promotional email volumes up nearly 300% driven by “$180 off Thanksgiving” and “get up to 70% off” discounts.
LOVESAC (LOVE) Steeper than year ago and higher volume significant discounts driven by “35% off Bundles”.
NIKE (NKE) Sequential and YoY declines in steep and significant discounts
VF CORP (VFC) Both North Face and Vans saw sharp rises in all categories of email promotions. Total inbox volumes, significant discounts, steep discounts and storewide promotions all rose to record highs.
contact us for to see the entire Holiday Promotional Outlier List
Within our universe of nearly 300 names, our email intelligence identified several brands relying on record setting promotions and discount to drive traffic both online and in stores. Compared with prior years, total promotional volume, total steep discounts, total significant discounts were all at least 100-200% higher than year ago levels.
Our systems alert investors to these situations which have often signaled dramatically reduced guidance.
BBBY, DASH ,GPRO
Tracking more than 1 million consumers, our ensemble has been successful at identifying severe slowdowns in demand for key goods and services.
(12) Our current list contains outliers that have shown dramatic deceleration in demand online.
