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To date, 145 of the 205 companies in our Retail/Restaurant Index have reported their EPS results for Q3 2023, representing 71% of the index. Of those companies that have reported their quarterly results, 69% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 27% reported earnings that fell below estimates. The Q3 2023 blended earnings growth estimate now stands at 26.4%.

The blended revenue growth estimate for the 205 companies in this index is 4.2% for Q3 2023. Of those companies that have reported their quarterly results so far, 58% announced revenue that exceeded analysts’ expectations and the remaining 42% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: LSEG Earnings Dashboard

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Source: I/B/E/S data from LSEG

This week in retail

Home Depot beat its Q3 revenue, earnings and SSS estimates. The retailer posted a 3.0% decline in revenue from a year ago. Still, the -3.1% Q3 SSS result is better than its -3.3% final estimate.

However, the home improvement retailer narrowed its full-year outlook. Demand for discretionary big-ticket items remained soft, while smaller DIY projects demand remained steady in Q3.

Exhibit 2: Q3 2023: Financial Actual/Estimates for Home Depot and Lowe’s

Source: LSEG I/B/E/S

The Home Improvement and Furniture groups received a boost during the pandemic. Accordingly, sales have slowed down since. As a result, the Container Store, Haverty’s Furniture, Williams Sonoma and Restoration Hardware are all in the bottom ten SSS performers for Q3 (Exhibit 3).

Exhibit 3: Weakest Same Store Sales Estimates: Q3 2023 Estimate vs. Q3 2022 Actual

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Source: LSEG I/B/E/S

Analysts polled by LSEG have lowered revenue outlooks for the Home Improvement and Furniture groups (HD, LOW, & RH) for this year. This comes as demand has slowed down within these groups after a strong pandemic season.

Due to the macroeconomic climate, it is hard to forecast when demand will bottom in 2024. Given that home sales are on the decline, it is likely that these retailers will guide lower this week. Analysts polled by LSEG remain cautious on these retailers for the remainder of the year. Still, looking forward, Home Depot and Williams Sonoma are better positioned and more likely to see a recovery first compared to their peers.

On the flip side, analysts polled by LSEG are bullish on Walmart this week. The retailer is likely to beat its Q3 earnings estimate and post a positive surprise.

Here are the Q3 2023 earnings and same store sales estimates for the companies reporting this week:

Exhibit 4: Same Store Sales and Earnings Estimates–Q3 2023

(Click on image to enlarge)

Source: LSEG I/B/E/S

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