by Jharonne Martis.
To date, 140 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2023, representing 67% of the index. Of those companies that have reported their quarterly results, 79% announced that profits beat analysts’ expectations, while 1% delivered on-target results and 20% reported earnings that fell below estimates. The Q1 2023 blended earnings growth estimate now stands at 30.9%.
The blended revenue growth estimate for the 201 companies in this index is 4.3% for Q1 2023. Of those companies that have reported their quarterly results so far, 79% announced revenue that exceeded analysts’ expectations and the remaining 21% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: Refinitiv Earnings Dashboard
Source: I/B/E/S data from Refinitiv
This week in retail
Home Depot reported Q1 2023 earnings of $3.82, slightly above its $3.80 estimate. However, revenue came in below expectations and dropped 4.2% from Q1 2022. Same Store Sales (SSS) came in at -4.5%, below its -1.5% SSS estimate. The home improvement retailer saw robust growth over the past three years, but expected sales to start moderating in 2023. According to its CEO, “Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather.” (Source: Q1 2023 earnings release)
Meanwhile, TJX is receiving a boost from value-seeking shoppers, and is on track to report a 2.5% SSS, followed by Ross Stores at 0.4% SSS.
The discounters are also expected to report this week. During the first quarter, consumers felt the pressure of higher food prices on their spending power and gravitated towards the discounters for every day low prices. As a result, Walmart is on track to report a robust 5.5% SSS this week. Our StarMine data also suggests that Walmart is likely to beat its earnings estimate of $1.32. Compared to Walmart, consumers spent less on discretionary items at Target, which is on track to report a 0.4% SSS.
Still, Walmart’s e-commerce is expected to grow a robust 20% (Exhibit 2).
Exhibit 2: Digital Sales Growth Estimates – Q1 2023
The following chart displays estimates of earnings and same store sales expectations for retailers that are scheduled to release their Q1 2023 results this week.
Exhibit 3: Same Store Sales and Earnings Estimates–Q1 2023