U.S. Consumer Spending Preview: Q4 2020

U.S. retailers soon will be reporting Q4 2020 earnings. Since there’s still uncertainty as to how long the pandemic will last, “stay-at-home”-related retailers and restaurant online delivery services continue to benefit. Homes have been converted into offices, gyms and education centers.

Retailers with a solid omnichannel strategy offer shoppers a safe, fast and efficient experience and are seeing strong double-digit e-commerce growth. Meanwhile, others continue to struggle as they remain constrained by limited client capacity, and are navigating through uncharted territory.

E-commerce platforms kept retailers running when COVID-19 forced store closures, but Americans are also telling us that online sales are here to stay even after the pandemic, Refinitiv discovered in a collaboration with Maru/Blue Public Opinion.

During most of the 2020 earnings season, retail winners reported record e-commerce sales. For the first half of 2020, U.S. e-commerce sales jumped 29.7% YoY, and are projected to grow even further to 39.3% YoY in the second half of the 2020, as per Refinitiv IFR.

Here are some highlights as we head into the Q4 2020 earnings season:

  • The Refinitiv U.S. Retail and Restaurant Q4 earnings index is expected to show a -12.0% change.
  • The Leisure Products and Internet & Catalog Retail sectors have the highest Q4 2020 earnings growth rates at 56.8% and 42.6%, respectively
  • Meanwhile, Hotels, Restaurant & Leisure Retail has the weakest Q4 2020 estimate of -119.3%.
  • The Refinitiv Retail Same Store Sales Index is expected to see a 7.4% growth in Q4 2020, above last year’s 2.3% result.
  • The Refinitiv Restaurant Same Store Sales Index is expected to see a -4.1% change in Q4 2020, the best showing in 2020.

Q4 2020 EARNINGS

The Refinitiv U.S. Retail and Restaurant Q4 earnings index is expected to decline by -12.0%. When looking at the earnings growth rates for Q4 for the 206 retailers tracked by Refinitiv, the Leisure Products and Household Durables sectors have the highest earnings growth rates at 56.8% and 42.6%, respectively (Exhibit 1). On the flip side, the Hotels, Restaurants & Leisure Retail category has the weakest anticipated Q4 2020 estimate of -119.3%.

Exhibit 1: The Refinitiv Retail Earnings Growth Rate – Q4 2020

(Click on image to enlarge)

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

Within the Leisure Products sector, Vista Outdoor Inc. has the strongest result with a 390.5% earnings growth rate. Similarly, the American toymaker Mattel and outdoor manufacturer Yeti Holdings are expected to see earnings growth rates of 109.9%, and 30.0%, respectively. The following companies have also already reported stronger-than-expected earnings: Polaris Inc. and Brunswick Corp. Six out of seven retailers in this sector are expected to see robust earnings growth in Q4.

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