by Jharonne Martis.
To date, 147 of the 204 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2023, representing 72% of the index. Of those companies that have reported their quarterly results, 80% announced that profits beat analysts’ expectations, while 1% delivered on-target results and 19% reported earnings that fell below estimates. The Q1 2023 blended earnings growth estimate now stands at 32.3%.
The blended revenue growth estimate for the 204 companies in this index is 4.4% 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
Walmart beat its Q1 2023 earnings, revenue and Same Store Sales. Moreover, the discounter raised its full year guidance, as consumers continue to gravitate to everyday values. Still, Q2 guidance came in as more conservative. Strong grocery sales also helped offset Q1 weakness from other discretionary items such as clothing. This is the same theme we heard from other retailers reporting earlier this week. In its earnings call, the discounter said it continues to gain market share in groceries from both higher income consumers and younger shoppers.
The retail giant also posted stronger than expected e-commerce sales of 26%, above its 20% estimate. Its omnichannel strategy continues to resonate well with shoppers. Consumers were hit with higher inflation in Q1 which caused them to be price sensitive, trade down, and stick to staples. Walmart has a global presence and says that this trend is evident around the globe.
Although inflation is cooling down, retailers are warning us that Q2 trends might be similar to Q1. Walmart said, “This stubborn inflation in dry grocery and consumables is one of the key factors creating uncertainty for us in the back half of the year because of the cumulative impact on discretionary spending in other categories, specifically general merchandise.” (Source: Walmart Q1 2024 Earnings Call, May 18, 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 2: Same Store Sales and Earnings Estimates–Q1 2023