February’s retail sales rose 0.7%, coming up short of the expected 0.9% increase - but keeping up the momentum from January’s 1.1% lift…

… thanks to a continued recovery in motor vehicle sales and resilience in general merchandise - a category which has steadily grinded higher since the pandemic…

… which tracks to Dollarama’s (DOL) step up in same-store growth over the period.

Health and personal care retailers have seen similar stability, further evidenced by Jamieson’s (JWEL) steady mid-to-high single digit growth in Canada…

… and together, these two less elastic buckets have taken an additional 5% of discretionary spend since 2017.

That’s pushed discretionary wallet share higher in recent years, but we’re starting to see moderation…

… which should be further pressured by elevated crude oil prices, where large swings have historically altered the composition of consumer spending.

The longer that lasts, the more dollars will flow out of non-core discretionary - mimicking the “trade down” we’ve seen from sit-down restaurants to fast-food…

… and showing a consumer that’s not as healthy as the headline data might suggest.

You might be interested in…

About Bullpen: Bullpen Finance Inc. publishes content on Canadian markets and provides paid research coverage of select Canadian issuers. Bullpen is paid in cash by covered issuers, does not accept stock or options, does not hold positions in covered securities, and does not conduct investment banking business. Bullpen and LodeRock Advisors Inc. are affiliated; LodeRock provides investor relations services to issuers, some of whom are covered by Bullpen Research. When a post discusses a covered issuer, a specific disclosure appears at the top of the post. This post is published for general information purposes. It is not personalized investment advice and is not tailored to any individual reader’s circumstances. Bullpen is not a registered investment adviser or dealer. For full disclosures, including analyst certification, jurisdictional statements, and conflict of interest policies, please see our Legal & Disclosures section on our website.