by Jharonne Martis.
U.S. retailers are reporting Q1 2019 earning, and already are warning about tariffs in a possible U.S.-China trade war. Macy’s called it “a dynamic situation,” right at the beginning of its earnings call. The tariffs enacted in 2018 were already baked into Macy’s 2019 guidance, and had no meaningful impact. However, 2019 could be a different story, and guidance could be affected after Macy’s assesses the possible risks. Still the company said it is working with their manufacturing and brand partners to minimize the impact on shoppers. Like Macy’s, other retailers could possibly be hit if the volatile trade situation continues in 2019.
Meanwhile, Macy’s investment strategy is paying off – and that’s what Wall Street investors want to hear. Online, digital and omnichannel investments are a huge expenditure for retailers that tend to eat up profits. Retailers have not been lazy about their survival. They have reinvented the way they do business and catered to shoppers’ needs. Consumers tend to crave newness. Some retailers have the technology to suggest and tell consumers what they might want before they know it – and those retailers tend to be top performers.
Customizing the shopping experience by curating each consumer’s experience on a mobile or digital shopping platform is key to retailers’ survival. Alibaba just registered a robust quarter lifted by its new app interface featuring more recommendations and media content.
Likewise, Macy’s and Children’s Place all beat earnings estimates. Macy’s utilizes its data analytics to curate what customers want. Children’s Place’s recent launch of Tiny Collections, the curated toddler line, is performing above expectations.
Reporting this week
Here are the same store sales and earnings results for retailers reporting earnings this week:
EXHIBIT 1: SAME STORE SALES AND EARNINGS EXPECTATIONS/RESULTS – WEEK OF MAY 13, 2019
Source: I/B/E/S data from Refinitiv
Sixty seven percent of companies in our Retail/Restaurant Index have reported Q1 2019 EPS. Of the 139 companies in the index that have reported earnings to date, 73% have reported earnings above analyst expectations, 6% reported earnings in line with analyst expectations and 21% reported earnings below analyst expectations. The Q1 2019 blended earnings growth estimate is 6.8%.
The Q1 2019 blended revenue growth estimate is 5.0%. Fifty five percent have reported revenue above analyst expectations and 45% reported revenue below analyst expectations.