13 Predictions For The Hardline Industry In 2016

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. (NYSE: AZO)’s margins have peaked, but O’Reilly Automotive Inc (NASDAQ: ORLY) and Advance Auto Parts, Inc. (NYSE: AAP) still have room for improvement.

6. Best Buy Co Inc (NYSE: BBY)’s operating profit dollars will increase for the third consecutive years.

7. Home Depot Inc (NYSE: HD) and Lowe’s Companies, Inc. (NYSE: LOW) will grow EBIT dollars and EPS in the double digits.

8. Restoration Hardware Holdings Inc (NYSE: RH) and Williams-Sonoma, Inc. (NYSE: WSM) will continue to outperform due to easy comps.

9. Revenues for both Staples, Inc. (NASDAQ: SPLS) and Office Depot Inc (NASDAQ: ODP) will decline in 2016, but Staples will gain market share.

10. Dicks Sporting Goods Inc (NYSE: DKS) will grow operating margins in 2016 for the first time in three years.

11. Tractor Supply Company (NASDAQ: TSCO) will struggle through the first half of the year, but will improve in the second half.

12. Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA) will not be able to duplicate its 2015 success, but will still produce strong comps in 2016.

13. Michaels Companies Inc (NASDAQ: MIK) will see accelerated comps this year.

Disclosure: The author holds no position in the stocks mentioned.

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