To date, 159 of the 201 companies in our Retail/Restaurant Index have reported their EPS results for Q4 2022, representing 79% 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 -22.0%.
The blended revenue growth estimate for the 201 companies in this index is 5.7% 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
A number of retailers reported mixed Q4 earnings results today. Still, the bulk are providing conservative guidance in the face of inflation worries and macroeconomic uncertainty for 2023. Of the 159 companies in the retail/restaurant index that have reported Q4 2022 earnings, 120 mentioned inflation worries.
Accordingly, the discounters are better poised to benefit in an inflationary situation compared to other retailers. Dollar Three smashed expectations as consumers continue to trade down and look for value. The discounter reported a 7.4% SSS above its 5.3% SSS estimate.
Ross Stores beat Q4 earnings and revenue expectations but said that store traffic was relatively flat compared to the previous year as shoppers feel the pressure from rising prices and are sticking to staples. As a result, the off-price retailer missed its -0.5% SSS estimate with a -1.0% SSS result. Meanwhile, Lowe’s was a big winner during the pandemic as consumers invested in their homes. This year, however, sales growth has slowed down as the housing market has cooled down. Consequently, the retailer reported a -1.5% SSS below its flat SSS expectation.
Despite being very promotional, demand was weak at Kohl’s and Urban Outfitters. The department stores have been out of favor for some time, and Kohl’s reported a -6.6% comp, below its -3.7% SSS estimate. Meanwhile, Urban Outfitters registered a 3.0% SSS, above its 2.2% SSS estimate. The retailer received a boost from Anthropologie and Free People, but demand at Urban Outfitters was weak despite heavy discounts. The retailer also gave us a glimpse for Q1 as comps at its name’s sake remain negative in February.
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 2: Same Store Sales and Earnings Estimates–Q4 2022
Source: I/B/E/S data from Refinitiv
