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August 23, 2023

Q2 2023 U.S. Retail Scorecard – Update Aug. 23, 2023

by Jharonne Martis.

To date, 169 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2023, representing 85% of the index. Of those companies that have reported their quarterly results, 78% announced profits that beat analysts’ expectations, while 5% delivered on-target results and 17% reported earnings that fell below estimates. The Q2 2023 blended earnings growth estimate now stands at 19.9%.

The blended revenue growth estimate for the 199 companies in this index is 3.3% for Q2 2023. Of those companies that have reported their quarterly results so far, 62% announced revenue that exceeded analysts’ expectations and the remaining 38% 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

Abercrombie & Fitch smashed its Q2 revenue and earnings estimates. The teen retailer reported a robust 13% SSS gain, above its 5.2% estimate. Likewise, its Hollister division beat its -2.5% SSS estimate, with a 5% SSS. Its merchandise is resonating well for the back-to-school season, and the teen retailer is bullish it can maintain the strong momentum into the holiday season. As a result, A&F raised its full-year guidance.

On the flip side, Williams Sonoma beat its Q2 earnings, but missed its revenue and same store sales estimates as the retailer is facing difficult comparisons. In addition, sales in the home category have slowed down.

Likewise, Kohl’s beat its Q2 earnings, but missed on revenue and same store sales. The department store reiterated its full year guidance, and in Q2 received a boost from its Sephora collaboration. During its earnings call, Kohl’s said, “Sephora at Kohl’s continues to exceed our expectations, driving a total beauty sales increase of nearly 90% year-over-year. We opened nearly 200 Sephora shops in the quarter, and momentum in our existing Sephora shops continues to accelerate with greater than 20% comparable beauty sales growth in the Sephora shops opened in 2021 and 2022.” (Source: Kohl’s Q2 2023 earnings call).

The beauty category continues to do well with the post-pandemic reopening. Accordingly, Ulta is expected to report a robust 6.3% SSS gain for Q2 2023.

Here are the Q2 2023 earnings and same store sales estimates for the companies reporting this week:

Exhibit 2: Same Store Sales and Earnings Estimates–Q2 2023

Source: LSEG I/B/E/S


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