U.S. Consumer Spending Preview: Q1 2021

U.S. retailers soon will be reporting Q1 2021 earnings. Not all states have fully reopened, but the Refinitiv numbers show that retail business has been picking up and Q1 retail earnings will start to show signs of recovery in areas that had been weak for some time. The stimulus checks put money in consumers’ pockets, and consumer confidence is back at pre-pandemic levels. As a result, there are signs that discretionary spending is up. Retail sales traffic really picked up during the weeks leading into Easter (Sunday, April 4) when shoppers hit the malls to buy apparel other than the traditional athleisure.

This Q1 earnings season is unusual because it marks the one-year anniversary of stay-at-home orders due to the pandemic. Same Store Sales (SSS) are also referred to as Comparable Store Sales. However, there is no comparable year to 2020. Never before has there been a government mandate for retailers and companies to close their physical locations. As a result, several retailers didn’t report SSS and many companies withdrew guidance back in Q1 2020.

Because of store closures, consumers were forced to go online to make purchases. As a result, “online sales” is one of the least disruptive measures. This will be the first year where e-commerce sales results will be telling if the flight to online spending looks to become permanent or is fading.

Looking forward to next week’s retail earnings releases, Refinitiv is looking at Walmart and Home Depot’s e-commerce estimates of 20% and 2.2%, respectively. This is on top of difficult e-commerce results last year, which suggest online business is holding up well.

Here are some highlights as we head into the Q1 2021 earnings season:

  • The Refinitiv U.S. Retail and Restaurant Q4 earnings index is expected to show a 93.0% change, because of easy comparisons from a year ago.
  • The Leisure Products and Multiline Retail sectors have the highest Q1 2021 earnings growth rates at 2137.9% and 736.2%, respectively
  • Meanwhile, Hotels, Restaurant & Leisure Retail has the weakest Q1 2021 estimate of -287.3%.
  • Analysts polled by Refinitiv have been raising their Q1 earnings estimates for 38% of the companies in the Refinitiv retail earnings index.
  • The Refinitiv Retail Same Store Sales index is expected to see a 10.9% growth in Q1 2021, above last year’s 6.5% result.
  • The Refinitiv Restaurant Same Store Sales index is expected to see a 7.8% change in Q1 2021.

Q1 2021 earnings

The Refinitiv U.S. Retail and Restaurant Q1 earnings index is expected to rise by 93.0%. This is due to easy comparisons from a year ago when most of the world went into lockdown.

When looking at the earnings growth rates for Q1 for the 203 retailers tracked by Refinitiv, the Leisure Products, and Multiline Retail sectors have the highest earnings growth rates at 2137.9% and 736.2%, respectively (Exhibit 1). On the flip side, the Hotels, Restaurants & Leisure Retail category has the weakest anticipated Q1 2021 estimate of -287.3%.

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