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November 14, 2022

Q3 2022 U.S. Retail Scorecard – Update Nov. 14, 2022

by Jharonne Martis.

To date, 143 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q3 2022, representing 70% of the index. Of those companies that have reported their quarterly results so far, 69% announced profits that beat analysts’ expectations, while 1% delivered on-target results and 30% reported earnings that fell below estimates. The Q3 2022 blended earnings growth estimate now stands at 2.1%.

The blended revenue growth estimate for the 204 companies in this index is 8.6% for Q3 2022. Of those companies that have reported their quarterly results so far, 63% announced revenue that exceeded analysts’ expectations and the remaining 37% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: Refinitiv Earnings Dashboard

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

This week: Q3 2022 earnings

Retail sales and earnings are in focus this week. Walmart and Home Depot will be the first to report Q3 2022 earnings, on track for Same Store Sales (SSS) growth of 3.8% and 2.9%, respectively.

The discount giant is on track to post a 5.2% revenue growth. However, its earnings are expected to drop -9.0%. As higher inflation looms, consumers have been holding back on general merchandise spending. However, grocery sales at Walmart can help offset this weakness. Although leaner inventory levels are expected at Walmart and Target, there’s been a rise in promotional levels while higher cost pressures continue to rise and eat the bottom line.

Meanwhile, this week’s earnings results from Home Depot, Lowe’s and Williams-Sonoma will signal the state of the housing market. Home Depot’s earnings are expected to grow by 5.5%. The home improvement retailer benefited from Hurricane Ian-related sales and growing pro-related sales.

During the pandemic, retailers saw spikes in online sales. This quarter’s e-commerce estimates show single digit growth, suggesting that these retailers are maintaining these sales levels. Walmart’s e-commerce is expected to grow a robust 7.5%, while Home Depot is expected to see a 1.3% e-commerce growth for Q3 2022.

Exhibit 2: Digital Sales Growth Estimates – Q3 2022

Source: Eikon Workspace

The following chart displays estimates of earnings and same store sales expectations for retailers that are scheduled to release their Q3 2022 results this week.

Exhibit 3: Same Store Sales and Earnings Estimates–Q3 2022

Source: Eikon Workspace

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