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CNBC
19 hours ago
- Business
- CNBC
An options trade to generate some income on Home Depot with earnings ahead
Home Depot (HD) , a leading home improvement retailer, is scheduled to announce its fiscal second-quarter 2025 earnings next Tuesday before the market opens. Analysts forecast earnings per share (EPS) of $4.71 on revenues of $45.43 billion, representing year-over-year increases of 2.33% in EPS and 5.21% in sales. This follows a challenging Q1, where comparable sales saw a slight decline of 0.3% due to cautious consumer spending. As of Friday, the stock has a year-to-date total return (net of dividends) of just 1%, trailing the S & P 500 by about 8.5%. The housing market has remained under considerable stress, largely influenced by higher interest rates than the immediate post-GFC period, high median home prices/shortages, and, more recently, signs of financial strain on consumers. Key areas to monitor in the earnings report include comparable sales trends, the performance of the professional (Pro) segment, an area of historical strength relative to competitor Lowe's, and management's guidance, especially in light of potential Federal Reserve interest rate adjustments. The Pro segment (serving contractors), accounts for roughly 50% of revenue and has typically provided stability, as professionals consistently rely on Home Depot for essential supplies and services. This segment's customer loyalty helps mitigate consumer spending volatility. Bulls anticipate that Q2 results will show accelerated demand within this segment, potentially surpassing consensus estimates if spring and summer project activity rebounds. Anticipated interest rate reductions are expected by some to rejuvenate the housing market; however, I would caution against too much optimism for housing on the basis of cutting short-term rates by the Fed, as mortgage rates are typically driven off the longer end of the curve. While affordability remains a concern, there have been signs that home prices have leveled off and, in some markets, are actually seeing declines. The issue of mortgage rates is not only affecting affordability for new buyers, but existing homeowners who have mortgage rates considerably lower than today's prevailing rates may feel "locked in" to their existing homes, as they could not replace their current mortgages at anything close to the rate they currently carry. From a valuation perspective, Home Depot trades at 25 times forward earnings, in line with the 5-year average; however, it should be mentioned that the housing market was far more favorable for several years during that period and the company does trade at a premium to comps of anywhere from 6% to 27%, depending on the metric. Competition from rivals like Lowe's and online retailers such as Amazon is intensifying, potentially eroding market share in more commoditized product categories. Home Depot has not typically moved sharply following its quarterly earnings releases, and alternative data, such as Bloomberg Second Measure and Similarweb see Home Depot's YoY revenue growth as better than the industry overall, even the most optimistic assessment is relatively modest, and the most pessimistic, , actually sees YoY growth at negative 2.5% and relative industry underperformance of 180bps. One additional consideration, due to the various delays in implementing tariffs, the effects have yet to be fully felt. The trade If one believes that Home Depot's earnings are likely to be a bit of a "non-event", as they generally have been in the past, one may want to sell some premium. I do not generally favor selling "naked upside" (uncovered calls), so for the upside, selling call credit spreads is a good approach. To the downside, selling cash-covered puts offers the opportunity to collect some premium with the risk of owning the stock at a discount to the prevailing stock price. Of course, one could also combine the two strategies, as I do in the example below. DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Fashion Network
04-08-2025
- Business
- Fashion Network
American Eagle says Sweeney ad campaign is only about ‘jeans'
American Eagle Outfitters Inc. defended its media campaign featuring Sydney Sweeney following criticism that the ads have racist undertones. The spot 'is and always was about the jeans,' the company said in a post on Instagram. American Eagle said it will 'continue to celebrate how everyone wears their AE jeans with confidence, their way.' The apparel retailer launched an ad blitz last week with the tagline 'Sydney Sweeney Has Great Jeans.' One of the campaign's videos plays on the same-sounding word 'genes' as Sweeney zips up her jeans and intones that 'genes are passed down from parents to offspring often determining traits like hair colour, personality and even eye colour.' 'My jeans are blue,' she adds, flashing her blue eyes at the camera. The video sparked a debate online about whether the focus on the genes of a White, blond woman conjured up the racist theory of eugenics. Other social media users have said critics are reading too much into the ads. When the campaign was initially unveiled on July 23, American Eagle shares rose. 'I think this is potentially one of the biggest gets in American Eagle history,' Chief Marketing Officer Craig Brommers, said in an interview with Women's Wear Daily on July 23. 'Sydney Sweeney is the 'It' girl of the moment, and she is helping us create the 'It' jeans campaign of the season,' he added. Data from Bloomberg Second Measure data, which tracks debit and credit card transactions from US consumers, hasn't shown any immediate impact on sales at American Eagle. Analysts are closely watching spending at the retailer during the important back-to-school season. Some shoppers might be turned off by the ad campaign and the noise around it, said Jessica Ramírez, managing director at retail analysis firm the Consumer Collective, and opt to shop at competitors such as Levi Strauss & Co., Abercrombie & Fitch Co. or Gap Inc. 'There are other options out there,' she said. JPMorgan analyst Matthew Boss recently cut his recommendation for American Eagle to underweight from neutral, saying that the market's expectations for earnings are too high. The company is looking to bounce back after pulling its 2025 outlook and a charge of $75 million related to the write-down of merchandise.
Straits Times
03-08-2025
- Entertainment
- Straits Times
American Eagle defends controversial Sydney Sweeney jeans ad
Sign up now: Get ST's newsletters delivered to your inbox American Eagle launched an ad blitz last week with the tagline 'Sydney Sweeney Has Great Jeans'. NEW YORK – American Eagle Outfitters defended its media campaign featuring actress Sydney Sweeney following criticism that the ads have racist undertones. The spot 'is and always was about the jeans', the company said in a post on Instagram. American Eagle said it will 'continue to celebrate how everyone wears their AE jeans with confidence, their way'. The apparel retailer launched an ad blitz last week with the tagline 'Sydney Sweeney Has Great Jeans'. One of the campaign's videos plays on the same-sounding word 'genes' as Sweeney zips up her jeans and intones that 'genes are passed down from parents to offspring, often determining traits like hair colour, personality and even eye colour'. 'My jeans are blue,' she adds, flashing her blue eyes at the camera. The video sparked a debate online about whether the focus on the genes of a white, blond woman conjured up the racist theory of eugenics. Top stories Swipe. Select. Stay informed. Singapore LTA, Singapore bus operators reviewing Malaysia's request to start services from JB at 4am World Trump is winning his trade war, but Americans will pay the price Singapore President Tharman meets migrant workers who saved driver of car that fell into sinkhole Singapore Singapore must stay socially progressive while conserving its cultures: Tharman Singapore Despite bag checks and warnings, young partygoers continue to vape in clubs in Singapore Opinion The charm – and drawbacks – of living in a time warp in Singapore Singapore Now flying solo, Acres CEO Kalaivanan Balakrishnan presses ahead with wildlife rescue efforts Life KPop Demon Hunters to get sequels, expanded universe to include musical, live-action remake Other social media users have said critics are reading too much into the ads. When the campaign was initially unveiled on July 23, American Eagle shares rose. 'I think this is potentially one of the biggest gets in American Eagle history,' chief marketing officer Craig Brommers, said in an interview with Women's Wear Daily on July 23. 'Sydney Sweeney is the 'It' girl of the moment, and she is helping us create the 'It' jeans campaign of the season,' he added. Data from Bloomberg Second Measure data, which tracks debit and credit card transactions from US consumers, has not shown any immediate impact on sales at American Eagle. Analysts are closely watching spending at the retailer during the important back-to-school season. Some shoppers might be turned off by the ad campaign and the noise around it, said Ms Jessica Ramirez, managing director at retail analysis firm the Consumer Collective, and opt to shop at competitors such as Levi Strauss & Co, Abercrombie & Fitch or Gap. 'There are other options out there,' she said. JPMorgan analyst Matthew Boss recently cut his recommendation for American Eagle to underweight from neutral, saying that the market's expectations for earnings are too high. The company is looking to bounce back after pulling its 2025 outlook and a charge of US$75 million (S$96.7 million) related to the writedown of merchandise. BLOOMBERG
Bloomberg
24-07-2025
- Business
- Bloomberg
Amazon Gave Prime Day Shoppers More Time to Browse. Many Went to Walmart
Inc. executives doubled the length of their summer Prime Day sale this year to give customers extra time to browse the vast selection of deals and discounts. There was a downside. With rising prices top of mind, shoppers surfed the web comparing deals, and a lot of their dollars went to Walmart Inc. instead. Walmart's weeklong 'Deals' event that ended July 13 outperformed Amazon's longest-ever Prime Day by several metrics. Spending on grew by 24% from its comparable deal period a year ago, six times faster than Amazon Prime Day's year-over-year growth, according to credit and debit card transaction data compiled by Bloomberg Second Measure. Walmart's web traffic increased 14% while Amazon's was flat, and Walmart's app use grew by 22% compared with Amazon's 3%, according to consumer research firm Similarweb.
Straits Times
18-07-2025
- Business
- Straits Times
Lululemon's best-selling black leggings now pile up at outlet stores
Find out what's new on ST website and app. Lululemon shares had declined 41 per cent in 2025 through July 16's close. NEW YORK – Lululemon Athletica is facing slowing sales, fewer store visitors and waning demand for its iconic black leggings as the yogawear retailer tries to pull itself out of a rough patch. Lululemon's core black leggings, which are vital products that rarely are discounted, are piling up at outlet stores, according to Randal Konik, an analyst at Jefferies. That's an alarming issue for Lululemon, he added, showing erosion in core demand for the brand's clothes. 'We've witnessed signals of a brand in decline and see risks to earnings ahead,' Mr Konik said in a note to clients on July 17. The analyst, a long-time critic of the company's strategy, has had an underperform rating on Lululemon's stock since 2022. Lululemon shares had declined 41 per cent in 2025 through July 16's close. Chief executive officer Calvin McDonald is trying to revive sales at Lululemon as the company faces rising competition from rivals such as Alo Yoga and Vuori. Lululemon has issued disappointing results in two straight quarters and trimmed its outlook for the full year. The CEO's efforts to double sales from 2021 to 2026 have hit several snags. Executives have said that profitability has been hurt by new US tariffs and warned investors that US consumers are cutting back spending. In June, Lululemon cut 150 corporate employees after a review of its organisational structure. Lululemon's observed sales in the US fell 4.2 per cent in June, according to Bloomberg Second Measure, which tracks anonymous debit and credit transactions. That's the biggest drop since November. Top stories Swipe. Select. Stay informed. World Trump diagnosed with vein condition causing leg swelling: White House World Trump was diagnosed with chronic venous insufficiency. What is it? Singapore 5 foreigners charged over scheme to deliberately get arrested in S'pore to sell sex drugs here Asia Appointment of Malaysia's new chief justice eases controversy over vacant top judge seats for now Singapore Driverless bus in Sentosa gets green light to run without safety officer in first for S'pore Singapore SPCA appoints Walter Leong as new executive director World US strikes destroyed only one of three Iranian nuclear sites, says new report Business Granddaughter of late Indonesian tycoon pays $25 million for Singapore bungalow An adjusted version of Bloomberg Second Measure's observed sales metric shows that the retailer's US sales are on track to decline 2.8 per cent in the quarter that runs through July. Analysts on average expect a gain of 1.9 per cent. Meanwhile, foot traffic to Lululemon's US stores fell more than 8 per cent in June, according to which measures visits through mobile device data. 'Designs still look disjointed, inventory growth is accelerating and sales cracks are expanding,' Mr Konik said in his note. BLOOMBERG
