To date, 157 of the 194 companies in our Retail/Restaurant Index have reported their EPS results for Q3 2024, representing 78% of the index. Of those companies that have reported their quarterly results, 64% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 32% reported earnings that fell below estimates. The Q3 2024 blended earnings growth estimate now stands at 7.4%.
The blended revenue growth estimate for the 194 companies in this index is 3.7% for Q3 2024. Of those companies that have reported their quarterly results so far, 53% announced revenue that exceeded analysts’ expectations and the remaining 47% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: LSEG Earnings Dashboard
Source: LSEG I/B/E/S
This week in retail
Gap and Ross were both impacted by unseasonably warm temperatures and severe hurricane weather. Ross Stores missed its Q3 revenue and same-store sales (SSS) estimates but exceeded earnings expectations. The retailer stated, “Although our low- to moderate-income customers continued to face persistently high costs on necessities, which pressured discretionary spending, we believe we could have better executed some of our merchandising initiatives” (Source: Ross Stores Q3 Earnings Call). Despite this, operating margin grew by 75 basis points to 11.9%, an improvement from 11.2% last year. The off-price retailer reduced promotions, a strategy other retailers have adopted in November to protect margins during the holiday season.
Meanwhile, Gap surpassed its Q3 revenue and earnings estimates. The retailer’s Athleta division posted the strongest comparable sales growth at 5.0%, highlighting consumer preference for athletic wear. Its namesake brand also reported a solid 3.0% increase, and the company achieved its highest operating margin in seven years while continuing to gain market share. As soon as the weather improved, the retailer saw an uptick in foot traffic and is optimistic about the holiday season.
Looking ahead to Q3 earnings next week, Abercrombie & Fitch is poised to report its sixth consecutive quarter of double-digit same-store sales (SSS) growth, with a Q3 SSS estimate of 10.0%. This strong performance signals that teens are still willing to splurge on a “must-have” pair of distressed denim jeans priced at $100. In contrast, department stores have been struggling. Nordstrom, Macy’s, and Kohl’s are expected to report comps of 1.4%, -2.7%, and -5.1%, respectively, indicating ongoing challenges for these retailers.
Here are the Q3 2024 earnings and same store sales estimates for the companies reporting this and next week:
Exhibit 2: Same Store Sales and Earnings Estimates – Q3 2024
Source: LSEG I/B/E/S
