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To date, 151 of the 194 companies in our Retail/Restaurant Index have reported their EPS results for Q3 2024, representing 78% of the index. Of those companies that have reported their quarterly results, 63% announced profits that beat analysts’ expectations, while 5% delivered on-target results and 32% reported earnings that fell below estimates. The Q3 2024 blended earnings growth estimate now stands at 7.3%.

The blended revenue growth estimate for the 194 companies in this index is 3.7% for Q3 2024. Of those companies that have reported their quarterly results so far, 54% announced revenue that exceeded analysts’ expectations and the remaining 46% 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 week’s earnings results highlight that the value proposition is key to the U.S. consumer. TJX posted strong Q3 financial results, driven by consumers’ preference for value. Similarly, Williams-Sonoma’s ability to offer a premium product with value helped the retailer exceed its Q3 financial expectations.

Walmart outperformed Target, benefiting from consumers’ preference for value and convenience. Shoppers from all income levels flocked to Walmart for everyday low prices. While purchasing more affordably-priced groceries, consumers also splurged on discretionary items, turning Walmart into a one-stop shop. Additionally, Walmart’s U.S. e-commerce grew by 22.0%, outpacing Target’s 10.8%.

A 3.0% same-store sales (SSS) increase reflects healthy consumer spending. Despite tough year-over-year comparisons, Walmart has managed to achieve 19 consecutive quarters of robust comps above 3.0%. In contrast, Target has reported two consecutive quarters of positive comps. During its Q3 earnings call, Walmart noted that engagement from higher-income households continues to account for the majority of its market share gains, suggesting that Walmart is steadily taking market share from Target.

Meanwhile, analysts polled by LSEG are optimistic about Gap’s Q3 performance, with the retailer expected to benefit from its Old Navy division. The consensus for Gap’s Q3 2024 EPS is $0.58. However, a highly rated analyst with an accurate track record has issued a Bold Estimate, which is higher than the consensus, projecting an EPS of $0.62. This indicates that Gap is likely to beat earnings expectations and post a positive surprise.

The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%) (Exhibit 2).

Exhibit 2: Gap StarMine SmartEstimate and Predicted Surprise %: Q3 2024

Source: LSEG Workspace

Here are the Q3 2024 earnings and same store sales estimates for the companies reporting this and next week:

Exhibit 3: Same Store Sales and Earnings Estimates – Q3 2024

(Click on image to enlarge)

Source: LSEG I/B/E/S

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