In a new report, Deutsche Bank analyst Mike Baker listed 13 market predictions for 2016. Here’s a rundown of the list.
Broad Predictions
1. After a strong 2015, the S&P Retailing Index will trade more in-line with the overall market this year.2. Retail sales growth will stabilize, but below historical levels.
3. Operating margins will benefit from improvements in gross margins and SG&A.
4. Cleaner department store inventories should produce off price gross margin gains.
A Few Specifics
5. AutoZone, Inc. AZO’s margins have peaked, but O’Reilly Automotive Inc ORLY and Advance Auto Parts, Inc. AAP still have room for improvement.
6. Best Buy Co Inc BBY’s operating profit dollars will increase for the third consecutive years.
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7. Home Depot Inc HD and Lowe’s Companies, Inc. LOW will grow EBIT dollars and EPS in the double digits.
8. Restoration Hardware Holdings Inc RH and Williams-Sonoma, Inc. WSM will continue to outperform due to easy comps.
9. Revenues for both Staples, Inc. SPLS and Office Depot Inc ODP will decline in 2016, but Staples will gain market share.
10.
Dicks Sporting Goods Inc DKS will grow operating margins in 2016 for the first time in three years.
11. Tractor Supply Company TSCO will struggle through the first half of the year, but will improve in the second half.
12. Ulta Salon, Cosmetics & Fragrance, Inc. ULTA will not be able to duplicate its 2015 success, but will still produce strong comps in 2016.
13. Michaels Companies Inc MIK will see accelerated comps this year.
Disclosure: The author holds no position in the stocks mentioned.
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