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To date, 180 of the 201 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2024, representing 90% of the index. Of those companies that have reported their quarterly results, 73% announced profits that beat analysts’ expectations, while 1% delivered on-target results and 26% reported earnings that fell below estimates. The Q1 2024 blended earnings growth estimate now stands at 22.5%.

The blended revenue growth estimate for the 201 companies in this index is 4.0% for Q1 2024. Of those companies that have reported their quarterly results so far, 52% announced revenue that exceeded analysts’ expectations and the remaining 48% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: LSEG Earnings Dashboard

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Source: LSEG I/B/E/S

THIS WEEK IN RETAIL

This earnings season underscores the paramount importance of value to consumers amidst persistent inflationary pressures. Major retailers such as Walmart, Gap, and off-price leaders like TJX, ROST, and Nordstrom Rack have all reported robust comparable sales figures. Furthermore, the demand for athleticwear remains strong across various retail channels, with Gap, Nordstrom Rack, and Dick’s Sporting Goods showcasing notable performance. Next week, Lululemon is anticipated to reveal a commendable 7.2% increase in same-store sales for Q1 2024, an impressive feat considering the challenging double-digit comparisons from the previous year.

As predicted by StarMine, Gap surpassed earnings expectations for Q1, demonstrating strong revenue and same-store sales growth. With a 3.0% comparable sales increase, exceeding the estimated 0.9% figure, Gap witnessed positive growth across all divisions. Notably, Old Navy achieved its highest quarterly comparable sales in three years at 3.0%, while Gap’s athletic segment continued to garner popularity with a 5.0% increase in same-store sales. The retailer’s management highlighted during the earnings call “Old Navy’s brand acceptance scores for quality impression and reputation are strong, giving us confidence that Old Navy is reasserting its position as the style authority in the value space” (Source: Gap Q1 2024 Earnings Call). Consequently, Gap raised its full-year guidance, reflecting optimism for future performance.

Similarly, although Nordstrom experienced strength in its activewear segment, the department store fell short of Q1 earnings estimates. Nonetheless, it exceeded revenue expectations and reported strong same-store sales. Nordstrom Rack outperformed with a 7.9% comparable sales increase, surpassing the anticipated 3.5% SSS. Meanwhile, the flagship brand achieved a 3.8% comparable sales growth, exceeding the projected 2.6% SSS.

Conversely, Ulta Beauty faced challenging same-store sales comparisons from the previous year, reporting a 1.6% increase, slightly below the estimated 1.7%. On a positive note, consumers continued to favor discounters for value, as evidenced by Costco’s impressive fiscal Q3 2024 performance. Costco surpassed financial expectations and observed a trend similar to Walmart, with consumers gravitating towards discretionary purchases. As articulated during Costco’s Q3 2024 Earnings Call, members resumed buying more discretionary items as inflation stabilized, particularly in categories such as toys, tires, lawn and garden, and health and beauty aids.

Here are the Q1 2024 earnings and same store sales estimates for the companies reporting this week:

Exhibit 2: Same Store Sales and Earnings Estimates – Q1 2024

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Source: LSEG I/B/E/S

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