Two developments of importance this week to the eating / food industry that we wanted to weigh in on, Albertsons’ quarterly results and General Mills’ investor day. The net-net is that the underlying cyclical and secular headwinds are intensifying for both the grocery and the limited-service restaurant industries. Albertsons Companies delivered a +2.3% comp-sales increase for all its banners. However, excluding inflation and GLP drugs (weight loss), grocery sales on a “real” basis fell -2.

As we previewed last week, high-end consumer spending in the US accelerated during Q3, which drove better retail sales for September and which we see in LVMH’s much better organic revenue growth for the quarter. Moreover, we also take Dollar Tree’s reiteration of its guidance and **Domino’**s very strong Q3 US Comps (+5.2%) as added evidence that there has not been a material degradation in spending by the less-affluent (despite market fears that there was and some data pointing to degradation).

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In last week’s note on Tesla’s better-than-expected deliveries, we shared that observed activity at Fremont and Austin showed no slowdown, despite an expected air pocket in demand following the expiration of the $7500 tax credit in September. We described that as “unexpected and curious.” Well, now we have an answer; yesterday, Tesla announced lower-priced models for the Model-Y ($39,900) and -3 ($36,990), which are about 12% lower than the prior entry-level trims (not including the $7500 tax credit), and $5K less than the next level up in trim.

The Census Bureau was to release its report of September retail sales on October 16th. That is on pause now given the shutdown; as a result, folks will have to look at alternative data to understand how the US consumer is doing – a popular concern these days given the weakish new hiring and net job growth. With that, we are pleased to report that we believe retail spending (as defined by the Census’ report ) during September accelerated from August’s healthy pace, with the incremental driver being stronger spending by affluent households and continued improvement in housing-related demand.

As previewed , Tesla’s Q3 global deliveries (+2%) were far ahead of expectations and Q2’s rate (-13%). Reported deliveries of 497K where 12% above the sell-side consensus of 443K. Given 3rd party reports of sales being down in Europe (-20% ish) and China (-HSD ish), the US was up strongly as Advan’s manufacturing and showroom data suggested. September domestic sales are estimated to be +6% per Morgan Stanley’s analyst. As shown, visits remained robust into the end of the month and the expiration of the $7500 tax credit.

Turnarounds are messy and non-linear, and that’s clear in Nike’s store foot traffic, as shown. A lot of the traffic decline is centered on weaker consumer spending by the non-affluent, which especially hits Nike’s classic styles (Air Force 1, Air Jordan 1, and Dunk), and Nike’s ongoing challenges in athleisure sportswear, in what is a weaker category overall vs. its post-pandemic upsurge. However, in the foot traffic pattern we see a firming up occurring given the moderating volatility and the favorable direction of the “swoosh.

Given our recent analysis on how extended store hours were driving additional visits to **Sam’s **and Costco, we were interested in what Costco had to say about it on yesterday’s earnings call. CEO Ron Vachris said, “We estimate these incremental hours have added about 1% to weekly U.S. sales since implementation. This has been very well received by our members.” CFO Gary Millerchip shared, “Excluding the membership fee increase and FX, membership income grew 7% year-over-year.

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Yesterday we took time to visit our nearby Apple store to check on the new iPhone Air (yes, it’s a very nice device) and was surprised by the high bustle of activity at the store despite it being 2:00 on a Wednesday afternoon. We were also struck by the number of folks saying to the salesperson, “We’re here to get new phones.” There were also numerous visitors trying on Apple Watches.