To date, 183 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2024, representing 91% of the index. Of those companies that have reported their quarterly results, 72% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 24% reported earnings that fell below estimates. The Q2 2024 blended earnings growth estimate now stands at 14.4%.
The blended revenue growth estimate for the 199 companies in this index is 3.6% for Q2 2024. Of those companies that have reported their quarterly results so far, 51% announced revenue that exceeded analysts’ expectations and the remaining 49% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: LSEG Earnings Dashboard
Source: LSEG I/B/E/S
This week in retail
Dollar Tree missed its earnings and revenue estimates, reporting a 0.7% increase in same-store sales (SSS) for Q2. Its Family Dollar segment posted a -0.1% SSS, slightly better than the -0.3% estimate. The low-end consumer segment has been most affected by the current macroeconomic climate. Although store traffic increased, consumers spent less per visit, with average tickets down 0.5%. Additionally, dollar stores have lost market share to larger retailers that have broadened their offerings and gained customer loyalty through everyday low prices. Dollar Tree commented, “Clearly, we are not pleased with our second-quarter results and are revising our full-year outlook. This updated outlook reflects the continuing pressure from the challenging macro environment.” (Source: DLTR Q2 2024 Earnings Call)
In contrast, Dick’s Sporting Goods exceeded earnings and revenue expectations, reporting a robust 4.5% increase in same-store sales, up from last year’s 1.8%. The activewear category was a strong performer in Q2, benefiting companies like Nordstrom and Gap. Dick’s Sporting Goods also raised its full-year guidance due to strong store traffic and higher average transaction amounts. Like other successful retailers, they attributed their strength to a strong omnichannel presence.
Here are the Q2 2024 earnings and same store sales estimates for the companies reporting this week:
Exhibit 2: Same Store Sales and Earnings Estimates – Q2 2024
Source: LSEG I/B/E/S
Looking ahead, RH is anticipated to report a 1.8% SSS, marking its first positive growth after nine consecutive quarters of negative comps. Weak macroeconomic conditions and poor housing sector performance are suppressing demand for home goods. The StarMine Analyst Revisions Model (ARM), which is predictive of future revisions and price movements, indicates a negative outlook for RH, with analysts increasingly downgrading their estimates. Additionally, the StarMine Smart Holdings model shows that buy-side analysts are becoming more pessimistic about RH, reflecting significant investor concerns. RH also scores just 10 out of 100 on the Short Interest Model, suggesting that investors are betting against the company.
Exhibit 3: RH StarMine Models Scores
Source: LSEG Workspace
Guidance
So far, 183 retailers have reported Q2 2024 earnings; of this group, many have cited higher prices, challenging macroeconomic conditions, and a cautious consumer as contributing factors.
Looking ahead to Q3 2024, 23 retailers issued negative preannouncements, while eleven issued positive EPS guidance so far (Exhibit 4). Of those retailers offering revenue guidance, 33 warned of disappointing results, while ten said revenue might be better than previously expected. As a result, the LSEG Retail/Restaurant Index is projecting weaker earnings growth rates for Q3 2024.
Exhibit 4: Earnings and Revenue Guidance: Q3 2024
Source: LSEG I/B/E/S
Discount levels – U.S. online retailers
The discount penetration (how much of the assortment is on sale) has risen this year, as consumers become more price conscious and concerned about the economy. LSEG discovered this in a collaboration with Centric Market Intelligence, which analyzes retailers, brands, online trends and products across the globe.
Exhibit 5: Average Discount Penetration: U.S. Online Retailers
Source: Centric Market Intelligence
Although more merchandise is discounted, the average percent discount in August was in line with this year’s average of 36%.
Exhibit 6: Average Discount: U.S. Online Retailers
Source: Centric Market Intelligence
