To date, 179 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2022, representing 88% of the index. Of those companies that have reported their quarterly results so far, 68% announced that profits beat analysts’ expectations, while 3% delivered on-target results and 29% reported earnings that fell below estimates. The Q1 2022 blended earnings growth estimate now stands at
-17.1%.
The blended revenue growth estimate for the 204 companies in this index is 10.9% for Q1 2022. Of those companies that have reported their quarterly results so far, 72% announced revenue that exceeded analysts’ expectations and the remaining 28% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: Refinitiv Earnings Dashboard
Source: I/B/E/S data from Refinitiv
This week: Q1 2022 earnings
Ulta Beauty went beyond smashing earnings expectations; instead, the company knocked them out of the park altogether. Despite the headwinds caused by higher inflation, strong demand boosted the beauty company’s profits, sending its EBITDA soaring for the quarter by 33.2% over year-ago levels. As a result, the retailer raised its full-year guidance. The company also reported a robust growth in its revenue of 21%. Moreover, its growth in Same Store Sales (SSS) came in at 18%, more than double the estimate of analysts tracked by Refinitiv, of 7.7%. This is even more impressive considering the company faced a difficult comparison over last year.
On the flip side, Gap reported earnings that fell short of expectations. Its Old Navy division which targets lower-end consumers, was hit the most among the group’s brands, reporting a dip of -22.0% in SSS, well short of the -16.5% SSS estimate. The demographic to which Old Navy caters is feeling the pinch of inflation the most, and these consumers are re-evaluating their needs and cutting back most on discretionary spending on items like clothing. Gap’s Banana Republic stores reported the strongest gain in SSS at 27.0%. Athleta, another of the Gap divisions, reported that its net sales rose 4.0%.
American Eagle also posted weaker-than-expected earnings and revenue. The retailer said in their press release that consumer demand was significantly lower than they had anticipated, putting downward pressure on operating profit. This resulted in a 2.0% gain in SSS, less than the 4.1% Refinitiv SSS estimate.
Other retailers are delivering similar warnings about the impact of rising prices on their results as they report their earnings for Q1 2022. So far, 179 retailers have reported Q1 earnings; of this group, 159 mentioned inflation concerns and 171 flagged supply chain issues.
Exhibit 2: Same Store Sales and Earnings Estimates–Q1 2022
Source: Eikon
