Q2 2020 U.S. Retail Scorecard – Update August 28, 2020

Eighty eight percent of companies in our Retail/Restaurant Index have reported Q2 2020 EPS. Of the 182 companies in the index that have reported earnings to date, 78% have reported earnings above analyst expectations, and 22% reported earnings below analyst expectations. The Q2 2020 blended earnings growth estimate is -45.1%.

 The Q2 2020 blended revenue growth estimate is -3.8%. Seventy-three percent have reported revenue above analyst expectations and 27% reported revenue below analyst expectations.

Exhibit 1: Refinitiv Earnings Dashboard

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

Current retail earnings

It is evident from Q2 earnings results that health and safety are a top priority for consumers as they made fewer trips to stores but purchased more items. Moreover, consumers spent their discretionary income more freely compared to Q1, when they stuck to key essentials. However, the boost in spending was attributed to the government’s stimulus checks. Despite high unemployment, consumers had money in their pockets and felt more confident about spending it. The latest Refinitiv Consumer Confidence report suggests that consumers are still very much concerned about high unemployment and if the checks stop coming in, they will put their hands in their pockets and hold back on spending. This will be to the detriment of the strong spending momentum that prevailed in the second quarter of 2020.

As predicted, Dick’s Sporting Goods beat earnings estimates and posted a positive surprise. The COVID-19 pandemic has many retailers withdrawing their earnings guidance. Therefore, the StarMine SmartEstimate may be more significant than ever as investors seek to anticipate earnings surprises.

 Exhibit 2: Same Store Sales and Earnings Estimates/results – Week of August 25, 2020

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