Episode summary
Don't Bet Against the US Consumer, Says Oliver Chen
Bloomberg Surveillance
· · 6 min · Guests: Oliver Chen, Jennifer Schmuck, Melissa Ritzius, Nicole Slaughter, Deontay Phillips, Marshal Cohen
Summary
The analyst said Black Friday shopping points to a consumer that is anxious but still spending, with demand still supported by income, value-seeking behavior and holiday “joy.” He forecasted up to 2% to 3% spending growth, while noting inflation and pricing are also running about 2% to 3%, which leaves unit growth flat and makes the retail backdrop more challenging than headline sales suggest.
He argued that consumers are mixing payment and fulfillment methods rather than abandoning stores: charge cards and buy-now-pay-later tools are both in use, alongside mobile ordering, buy online pickup in store, curbside pickup and delivery. The physical store still matters because shoppers want the experience, even if traffic and promotions are uneven.
On retail picks, he favored Walmart for its value positioning, grocery strength, delivery, marketplace model and digital advertising opportunity. In luxury, he said the market is bifurcated, with pressure at the low and middle but strength at the high end, especially jewelry and brands tied to quality, quiet luxury and creative change. He also said selective M&A remains possible in beauty, skincare and niche fragrance.
Key takeaways
- The analyst expects holiday spending to rise 2% to 3%, but says inflation and pricing around 2% to 3% leave units flat.
- He said consumers are anxious but still have money, so investors should not bet against the U.S. consumer.
- He favors Walmart because of grocery scale, everyday low prices, delivery, marketplace growth and digital advertising.
- He sees luxury as bifurcated, with jewelry and high-end brands outperforming while handbags remain under pressure.
- He expects selective M&A in beauty, skincare and niche fragrances as the consumer stabilizes.
Notable quotes
“the consumer still has money, wants joy. We're forecasting up to two 3%”
“don't bet against the US consumer. It's been solid worldwide”
“We like Wal-Mart. We like the story. We like the value story”
“there's a there's definitely a barbell and bifurcation where more pressure at the low and middle and then some real strength at the high end”
“M&A is is totally possible. And we're watching the IPO market, too”
How the episode opens
Levi's is an iconic brand with dominant market share at the premium end of the market. Also, as we think about what's happening now and product execution, it's about classics with a twist. It's about getting great value as well.
And denim fits really nicely into these themes. What Levi's is doing specifically is more direct to consumer, basically opening their own stores globally and consumers are looking for value. It plays quite nicely with quality.
As you know, fiber ones last forever and you shouldn't wash them. Either we turn it or you'll tell me. Yeah, I get that lecture at home.
We turn to surveillance fashion correspondent Lisa mateo. Lisa, Brandy Melville is on the Mateo target, isn't it? Oh.
Okay. So yesterday I received my daughter's seven page PowerPoint presentation for her Christmas list. My question to you, Oliver's is, are people going to be spending as much as they did last holiday season?
That's what I want to know because I put a budget out there. Yeah. Lisa, First of all, I want that Dec, please.
You know, it's the King's second. We are seeing spending. We're seeing a consumer that does have plenty of anxiety, that's looking for great deals.
That being said, the consumer still has money, wants joy. We're forecasting up to two 3%. Keep in mind, inflation and pricing will be about 2 to 3%.
So your units are flat and there's a bit of a struggle. On the one hand, consumers will enjoy and wellness and gifting. On the other hand, they're feeling anxious.
So we're watching both. And there's a bunch of cross-currents, but don't bet against the US consumer. It's been solid worldwide.
Oliver Chen with TD Cowen. And we continue. Oliver, are we going to get out charge cards or like the Affirm buy now pay later kind of thing?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- black friday retail sales
- consumer sentiment
- retailer outlook
- labor market cooling
- tariff fallout
Companies and tickers mentioned
- M
- RL
- BBY
- TGT
- TD Cowen
- Macy's
- Ralph Lauren
- Best Buy
- Gap Inc.
- Target
- Circana
- Edikted
Watch the episode
Watch “Don't Bet Against the US Consumer, Says Oliver Chen” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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