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February 24, 2021

Q4 2020 U.S. Retail Scorecard – Update February 24, 2020

by Jharonne Martis.

Sixty one percent of companies in our Retail/Restaurant Index have reported Q4 2020 EPS. Of the 125 companies in the index that have reported earnings to date, 73% have reported earnings above analyst expectations, 2% matched and 25% reported earnings below analyst expectations. The Q4 2020 blended earnings growth estimate is -10.3%.

The Q4 2020 blended revenue growth estimate is 7.8%. Seventy one percent have reported revenue above analyst expectations, and 29% reported revenue below analyst expectations.

Exhibit 1: Refinitiv Earnings Dashboard

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

 Q4 2020 retail earnings

Lowe’s and TJX beat their same store sales (SSS) estimates. TJX reported a -3.0% comp above its -6.8% SSS estimate, despite still facing many store closures. This result is also an improvement from the previous quarter. The retailer saw positive double digit growth at its Home Goods division, which posted a 12% SSS result. This underlines the strength in the home sector.

Lowe’s also posted an impressive digital sales increase of 121%. “Looking ahead to 2021, we expect to grow market share and drive further operating margin expansion,” the company said in its Feb. 24 earnings news release. Sales were boosted by do-it-yourself (DIY) business, which outpaced pro comps. Looking forward to the economy reopening, the home improvement sectors have an opportunity to gain more pro business as consumers become more comfortable allowing professionals in their homes for renovations.

The pandemic retail winners will be facing difficult year-over-year SSS comparisons starting in Q1 2021, which could result in flat to single digit comps in 2021. Therefore, it is better not to look at these numbers on their own as they don’t provide the full picture.

This has caused investors to shift their gears from pandemic to recovery stocks. Meanwhile, Americans are telling us that even after the COVID-19 pandemic is over, they intend to continue practicing social distancing measures, ordering online, and avoiding large crowds. Refinitiv discovered this in a survey collaboration with Maru/Blue Public Opinion:

Exhibit 2: Post-COVID-19 Survey

Source: Refinitiv IFR

Looking forward to retailers reporting earnings, here are Refinitiv’s expectations:

Exhibit 3: Retailers Reporting Q4 2020 Same Store Sales and Earnings

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

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