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To date, 158 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2024, representing 79% of the index. Of those companies that have reported their quarterly results, 72% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 24% reported earnings that fell below estimates. The Q2 2024 blended earnings growth estimate now stands at 13.9%.

The blended revenue growth estimate for the 199 companies in this index is 3.6% for Q2 2024. Of those companies that have reported their quarterly results so far, 49% announced revenue that exceeded analysts’ expectations and the remaining 51% 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

Target has demonstrated a significant turnaround after four consecutive quarters of declining comparable sales, reporting a 2.0% increase in its latest same-store sales (SSS) figures. The retailer surpassed Q2 earnings and revenue estimates, driven by increased store traffic and a rise in demand for discretionary items, including apparel. Consequently, Target has raised its full-year guidance. Additionally, e-commerce sales exceeded the projected 3.0% growth, achieving a notable 8.7% increase.

Similarly, TJX beat on Q2 earnings, revenue and SSS, and raised its full-year guidance. The retailer said that the third quarter is off to a great start. Consumers are increasingly price-conscious due to rising costs, which has led analysts polled by LSEG to favor off-price retailers. While other retailers struggle with back-to-school sales, TJX is experiencing positive trends. TJX is ranked in the top decile for the StarMine Price Momentum, Smart Holdings, and Short Interest models (Exhibit 2). The retailer scores a notable 95 out of 100 on the Short Interest Model, indicating that investors are not betting against the company. Additionally, TJX benefits from favorable stock price momentum and an impressive score of 86 out of 100 on the StarMine Earnings Quality (EQ) Model, reflecting sustainable earnings.

Exhibit 2: TJX StarMine Models Scores

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Source: LSEG Workspace

Buy-side analysts are increasingly optimistic about TJX, as evidenced by the StarMine Smart Holdings Model, which highlights key investor concerns. Notably, TJX’s high return on equity (ROE) and return on assets (ROA) make it a compelling investment choice. The off-price retailer is profitable and therefore is attractive to the buy side.

In contrast, Macy’s exceeded its Q2 earnings expectations but fell short on revenue and SSS estimates. Macy’s has revised its full-year guidance downward and plans to close 150 underperforming stores. Despite positive sales growth in its Bluemercury beauty division, overall inventory levels remain high, attributed to a challenging consumer environment (Source: Macy’s Q2 2024 Earnings Release).

The department stores have been out of favor for some time. Kohl’s is performing poorly in the StarMine Analyst Revisions Model, Smart Holdings, and Short Interest models (Exhibit 3). The StarMine Analyst Revisions Model predicts future revisions and price movement, with Kohl’s scoring only 13 out of 100, indicating a bearish outlook. It suggests that analysts are bearish on the department store and have been revising estimates downwards. The StarMine Smart Holdings Model also reflects negative sentiment from buy-side analysts, and Kohl’s scores just 2 out of 100 on the Short Interest Model, suggesting investors are betting against the company.

Exhibit 3: Kohl’s StarMine Models Scores

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Source: LSEG Workspace

Meanwhile, Lowe’s surpassed its Q2 earnings estimates but fell short on revenue and same-store sales, prompting a reduction in its full-year forecast due to weak macroeconomic and housing growth projections for the latter half of the year. Like Home Depot and Walmart, Lowe’s is capitalizing on its technological investments, and said during its earnings call: “As we continue to involve our omnichannel strategy, we’ve learned that having multiple delivery platforms extends our reach into both urban and suburban areas and helps us drive incremental sales with different types of customers, especially younger generations who are more digitally savvy.” (Source: Lowe’s Q2 2024 Earnings Call)

Here are the Q2 2024 earnings and same store sales estimates for the companies reporting this week:

Exhibit 4: Same Store Sales and Earnings Estimates – Q2 2024

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Source: LSEG I/B/E/S

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