Q4 2022 U.S. Retail Scorecard – Update Feb. 28, 2023

To date, 146 of the 201 companies in our Retail/Restaurant Index have reported their EPS results for Q4 2022, representing 73% of the index. Of those companies that have reported their quarterly results, 65% announced that profits beat analysts’ expectations, while 3% delivered on-target results and 32% reported earnings that fell below estimates. The Q4 2022 blended earnings growth estimate now stands at -21.4%.

The blended revenue growth estimate for the 201 companies in this index is 5.8% for Q4 2022. Of those companies that have reported their quarterly results so far, 66% announced revenue that exceeded analysts’ expectations and the remaining 34% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: Refinitiv Earnings Dashboard

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

This week: Q4 2022 earnings

Target beat its earnings, revenue and Same Store Sales (SSS) estimates for Q4 2022. Similar to other retailers, it provided conservative guidance as inflation continues to affect consumer spending. Moreover, the discounter offered steep promotions to move inventory.

Still, the strength in Q4 came from Groceries, Household Essentials and Beauty which helped offset ongoing weakness in discretionary categories. This is interesting, because Target has been very promotional. However, it’s been raising prices for beauty aggressively over the past two years, by an average of 50%, as Refinitiv discovered in a collaboration with Centric Pricing, formerly StyleSage (Exhibit 2). This, in turn, helped drive an increase in consumer traffic.

Refinitiv data suggest that there is more room for the Beauty category to continue to grow, as consumers are still working in a hybrid environment and are gradually returning to offices and events.

Exhibit 2: Target Price Changes on Key Products: 2021 –2023

Source: Centric Pricing (formerly StyleSage)

The following chart displays estimates of earnings and same store sales expectations for retailers that are scheduled to release their Q4 2022 results this week.

Exhibit 3: Same Store Sales and Earnings Estimates–Q4 2022

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