Beneath the robust sales figures lies a more complex economic reality. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
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As we kick off our 2024 in Review series, a hearty thank you for inviting Breakfast News into your morning routine! Our team of Foolish investors wishes you and yours a very happy holiday season, and we'll be taking the next two days off. Breakfast News will be back in your inbox on Thursday, December 26, as we count down to the end of the year, with special editions through December 31. |
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Despite stubborn prices and higher interest rates, the economy proved resilient in 2024 — though consumer behavior shifted dramatically. Inflation pushed consumers to be “thoughtful” in prioritizing spending, in the words of BJ’s Wholesale (NYSE: BJ) CEO Robert Eddy. This shift created unexpected winners and losers during earnings season, with seemingly similar retailers experiencing starkly different outcomes. Even established brands discovered that heritage alone couldn’t guarantee success. As thoughtful consumers prioritized value and need over brand loyalty, some of the biggest names experienced significant volatility throughout the year. |
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Defying predictions of consumer caution, economic data in 2024 consistently exceeded expectations.The U.S. economy expanded by 3.1% in the most recent quarter, fueled by consumer spending which surged 3.7% — its strongest increase since early 2023. The services sector — particularly restaurants and hotels — emerged as a standout performer, indicating Americans maintained their appetite for dining out and travel despite economic pressures. |
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Looking Ahead: Emily Flippen’s Take |
Companies for the Choosy Investor |
As inflation remains a headwind for consumers, investors should expect the divide between luxury and discount goods to widen. Consumers are likely to spend more on products with strong brand power while trading down in areas where cost-cutting is easier. Companies like Costco (NASDAQ: COST) and e.l.f. Beauty (NYSE: ELF) are prime examples of stocks that could benefit in this tighter environment. Costco, for instance, not only retained but grew its membership during the Great Recession, as shoppers saw value in its membership-based model. Similarly, e.l.f. Beauty may experience sales growth and faster customer acquisition if consumers opt for more affordable options in everyday purchases like makeup and skincare products. On the flip side, businesses like Lululemon (NASDAQ: LULU), which have made a name for themselves by not promoting through sales or discounts, have maintained strong gross margins even in tougher times. The company’s robust brand power and less frequently purchased goods could help retain customers through an inflation-ridden 2025. |
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