Q2 2019 Retail Scorecard – Update

Sixty nine percent of companies in our Retail/Restaurant Index have reported Q2 2019 EPS. Of the 144 companies in the index that have reported earnings to date, 69% have reported earnings above analyst expectations, 9% reported earnings in line with analyst expectations and 22% reported earnings below analyst expectations. The Q2 2019 blended earnings growth estimate is 1.9%.

 The Q2 2019 blended revenue growth estimate is 1.9%. Sixty-one percent have reported revenue above analyst expectations, 1% matched and 38% reported revenue below analyst expectations.

Exhibit 1: Refinitiv Earnings Dashboard

 

Source: I/B/E/S data from Refinitiv

Here are the Same Store Sales and Earnings estimates for retailers reporting earnings this week:

Exhibit 2: Same-Store Sales and Earnings Expectations/Results – Week of Aug. 13, 2019

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

Walmart

Walmart is set to report Q2 earnings this week. The retailer has done a great job maintaining and upgrading its site, offering more products, and enhancing its offerings. It continues to expand its international omnichannel presence, including Mexico. Refinitiv is looking at a 2.1% SSS growth, suggesting traffic and digital growth was healthy in Q2.

Exhibit 3: Walmart Ecommerce Sales

Source: I/B/E/S data from Refinitiv

Trade Wars: Retailers at Risk

There’s been concern about a new 10% tariff due to be imposed on $300 billion in Chinese imports. Tariffs have recently been delayed for some Chinese goods until December. As big retail names are scheduled to report Q2 earnings, Wall Street is wondering which retailers will be more vulnerable to the increased tariffs.

At Risk

Manufacturing

Below is a table of the most vulnerable retailers to tariffs, since many of their products are sourced and manufactured in China:

Exhibit 4: Retailers with Products Sourced/Manufactured in China

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

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