Q2 2023 U.S. Retail Scorecard – Update Aug. 16, 2023

To date, 149 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2023, representing 75% of the index. Of those companies that have reported their quarterly results, 79% announced profits that beat analysts’ expectations, while 5% delivered on-target results and 16% reported earnings that fell below estimates. The Q2 2023 blended earnings growth estimate now stands at 18.8%.

The blended revenue growth estimate for the 199 companies in this index is 3.2% for Q2 2023. Of those companies that have reported their quarterly results so far, 63% announced revenue that exceeded analysts’ expectations and the remaining 37% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: LSEG Earnings Dashboard

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

This week in retail

Target beat its Q2 2023 earnings but missed its revenue and same store sales estimates. The retailer cut its full-year guidance, and said during its earnings call that its Target Circle week was a success. This is inline with July U.S. retail sales and suggests that promotions and deals are driving shoppers to open up their wallets.

The discounter also said that the impact of inflation is absorbing “a much-higher portion of consumers’ budgets. In addition, consumers are choosing to increase spending on services, like leisure travel, entertainment and food away from home, putting near-term pressure on discretionary products” (Source: Target Q2 2023 earnings call). On the flip side, its Beauty division saw double-digit growth thanks to its collaboration with Ulta Beauty.

Meanwhile, analysts polled by LSEG are bullish on Walmart and have been revising their Q2 estimates upwards for the discounter. Our StarMine data show that Walmart is likely to post a positive Q2 surprise, as consumers continue to gravitate towards the discounter for everyday low prices. The retailer is on track to post a 4.7% SSS growth for Q2 2023.

Exhibit 2: Walmart StarMine Models Scores

Source: LSEG Eikon