Q4 2020 U.S. Retail Scorecard – Update March 1, 2020

Seventy three percent of companies in our Retail/Restaurant Index have reported Q4 2020 EPS. Of the 149 companies in the index that have reported earnings to date, 69% have reported earnings above analyst expectations, 3% matched and 28% reported earnings below analyst expectations. The Q4 2020 blended earnings growth estimate is -10.7%.

The Q4 2020 blended revenue growth estimate is 7.7%. Sixty nine percent have reported revenue above analyst expectations, and 31% reported revenue below analyst expectations.

Exhibit 1: Refinitiv Earnings Dashboard

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

 Q4 2020 retail earnings

Analysts polled by Refinitiv are becoming increasingly bullish on Target. The number of stock “buy” recommendations has gone up since December 2020 (Exhibit 2). The discounter gained a lot of market share during the pandemic and that continues to translate into customer loyalty into 2021. Its investments in pick up/drive up/Shipt are paying off, as consumers increasingly gravitate towards the same-day offering as a recurring service. In the previous quarter alone, same-day services (order pick up, drive up and Shipt) grew 217%. This suggests that consumers are adopting its same-day service and making it part of their regular shopping habits. This service also makes Target even more attractive to potential new customers.

Exhibit 2: Target and Kohl’s Stock Recommendation Dec 2020 vs. Mar 2021

Source: Refinitiv Eikon

Both Target and Kohl’s announced deals with beauty retailers Ulta and Sephora. Both will rollout these new concepts in fall 2021. Kohl’s athleisure offering is also resonating well with shoppers, a popular trend during the pandemic. Kohl’s has also been proactive in removing its less popular apparel brands from its offerings.

Analysts polled by Refinitiv are becoming more bullish on Kohl’s as all these initiatives appear to be positioning the retailer for future growth. Looking forward, the StarMine ARM model is highly predictive of both the direction of future revisions and price movement. Kohl’s score has been on the rise since November 2020 when it scored a 51 (Exhibit 3). Currently, the retailer scores a 99 out of a possible 100 suggesting that analysts are likely to revise earnings estimates upward.

Exhibit 3:  StarMine Analysts Revisions Model (ARM) for Kohl’s 2019 – 2021

Source: Refinitiv Eikon

Exhibit 4: Retailers Reporting Q4 2020 Same Store Sales and Earnings

Source: Refinitiv I/B/E/S