U.S. Retail Sales Preview

Image Source: Unsplash

LSEG IFR Markets forecasts a challenging development for Q2 U.S. retail sales, with overall and ex-autos sales anticipated to increase by only 0.2% in May 2024. The control group is expected to fare slightly better with a 0.4% rise, though this still reflects a sluggish start to the quarter following April’s 0.3% decline.

Unit auto sales experienced modest growth for the month, reaching an annualized rate of 15.90 million, marking the fastest pace this year. Meanwhile, gas prices have moderated after a period of rapid increases. However, the downturn in home sales since the beginning of the year suggests limited demand for related goods.

Exhibit 1: U.S. Retail Sales – May 2024

(Click on image to enlarge)

Source: LSEG IFR Markets

Outlook – Q2 2024 Earnings Growth: Retail/Restaurant Industries

For Q2 2024, the LSEG Retail/Restaurant Index is looking at a 6.6% blended estimated earnings growth rate, and a 1.6% blended estimated revenue growth rate. Both growth rates represent a significant slowdown in consumer spending, compared to Q1 2024.

Five out of the ten consumer-related industries have turned positive. The Broadline Retail sector continues to be on track to record one of the highest estimated earnings growth rates in the second quarter, a 51.0% surge over last year’s level (Exhibit 2). On the flip side, the Personal Care Products is on track to post the weakest estimated earnings growth rates in the second quarter at -6.6%.

Exhibit 2: Q2 2024 Earnings Growth Rates: LSEG Retail and Restaurant Index

(Click on image to enlarge)

Source: LSEG I/B/E/S

Discount Levels – U.S. Online Retailers

The discount penetration (how much of the assortment is on sale) has declined this year. LSEG discovered this in a collaboration with Centric Market Intelligence, formerly StyleSage, which analyzes retailers, brands, online trends and products across the globe. Despite the recent Memorial Day discounts in May, the year-to-date average is now at its lowest point in over five years.

Exhibit 3: Average Discount Penetration: U.S. Online Retailers

(Click on image to enlarge)

Source: Centric Market Intelligence, formerly StyleSage Co.

Accordingly, the average percent discount in June has also declined to 34%, below last year’s 38.0%.

Exhibit 4: Average Discount: U.S. Online Retailers

(Click on image to enlarge)

Source: Centric Market Intelligence, formerly StyleSage Co.

More By This Author:

Monday Morning Memo: Why Active Managers Should Wrap Their Portfolios In An ETF
S&P 500 Index Funds See Largest Weekly Outflow on Record
S&P 500 Earnings Dashboard 24Q1 - Friday, June 14

Disclaimer: This article is for information purposes only and does not constitute any investment advice.

The views expressed are the views of the author, not necessarily those of Refinitiv ...

How did you like this article? Let us know so we can better customize your reading experience.