May 17, 2023

Q1 2023 U.S. Retail Scorecard – Update May 17, 2023

by Jharonne Martis.

To date, 144 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2023, representing 71% 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 31.6%.

The blended revenue growth estimate for the 204 companies in this index is 4.2% for Q1 2023. Of those companies that have reported their quarterly results so far, 78% announced revenue that exceeded analysts’ expectations and the remaining 22% 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

Target reported stronger than expected Q1 2023 earnings, revenue and Same Store Sales. The discounter saw weakness from discretionary items, including the home category, as consumers remain value conscious. This was offset by strong sales in beauty and groceries. The discounter said during the earnings call that “Q1 performance was led by Beauty, which delivered comp growth in the mid-teens in light of continued strength in both core Beauty and Ulta Beauty at Target assortment.” (Source: Target Earnings Call, Q1 2023)

The strength in beauty is a good indicator that Ulta Beauty might also have a stronger than expected earnings season. The beauty retailer is on track to post a robust 8.9% SSS for Q1 2023, on top of difficult comparisons from a year ago.

Meanwhile, TJX posted mixed results as it missed its Q1 2023 revenue estimate but beat on earnings. The retailer’s guidance fell short as it warned of a possible slowdown in consumer demand later this year.

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 2: Same Store Sales and Earnings Estimates–Q1 2023

Source: Eikon Workspace

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