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To date, 149 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2022. This group, which represents 73% of the index. Of those companies that have reported their quarterly results so far, 69% announced that profits beat analysts’ expectations, while 4% delivered on-target results and 27% reported earnings that fell below estimates. The Q1 2022 blended earnings growth estimate is -17.8%.
The Q1 2022 blended revenue growth estimate for this index is 10.7%. Of those companies that have reported their quarterly results so far, 71% announced revenue that exceeded analysts’ expectations and the remaining 29% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: Refinitiv Earnings Dashboard
Source: I/B/E/S data from Refinitiv
Last year at this time, the Refinitiv Same Store Sales (SSS) index posted a whopping gain of 14.6% gain in same-store sales for Q1 2021 over year-earlier levels. That’s the strongest result SSS recorded over the pandemic’s lifespan, and can be traced in part to the boost that government stimulus checks gave to consumers’ ability and willingness to spend. This means that for Q1 2022 retailers faced very difficult comparisons. Currently, low-income consumers are being squeezed the most in the absence of stimulus checks that last year boosted their cash flow. On top of that they are facing higher inflation, which is diminishing their spending power. Weaker-than-expected earnings results from discount retailers which target mostly these lower-income consumers, reflects this new reality.
Other retailers are delivering similar warnings as they report their earnings for Q1 2022. So far, 149 retailers have reported Q1 earnings; of this group, 131 mentioned inflation concerns and 142 flagged supply chain issues.
The government last week released retail sales data for the month of April. This showed that online sales posted the biggest gains over year-ago levels. This means that even as these online retailers are shipping more products, they must struggle to cope with much higher fuel prices and an inflationary environment, both of which are driving up costs and eating into profits.
The following chart displays estimates of earnings and same store sales expectations for retailers that are scheduled to release their Q1 2022 results this week.
Exhibit 2: Same Store Sales and Earnings Estimates–Q1 2022
Source: Source:Eikon
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