To date, 182 of the 194 companies in our Retail/Restaurant Index have reported their EPS results for Q3 2024, representing 94% of the index. Of those companies that have reported their quarterly results, 62% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 34% reported earnings that fell below estimates. The Q3 2024 blended earnings growth estimate now stands at 7.3%.
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
The week in retail
Looking ahead to Q3 earnings next week, Macy’s is on track to report its results. The consensus estimate for Macy’s Q3 2024 EPS is $0.02. However, our StarMine Predicted Surprise indicates that this consensus estimate differs from the StarMine SmartEstimate by more than 16.8%. The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent and more accurate analysts. Our studies show that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises in the right direction 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%) (Exhibit 2).
This suggests that Macy’s is likely to beat its Q3 earnings estimate and post a positive surprise.
Exhibit 2: Macy’s StarMine Predicted Surprise %
Source: LSEG Workspace
In fact, since the beginning of November, analysts polled by LSEG have become significantly more bullish on the retailers listed in the table below (Exhibit 3). The StarMine Analyst Revisions Model predicts future revisions and price movements, with Urban Outfitters scoring 100 out of 100, indicating a bullish outlook. This suggests that analysts are optimistic about the apparel retailer, which has experienced the most significant increase in its ARM score as analysts have revised estimates upwards.
Exhibit 3: StarMine Analysts Revisions Model Score Improvement: November 1 – December 5, 2024
Source: LSEG Workspace
Bearish outlooks
On the flip side, analysts polled by LSEG have become significantly more bearish on the retailers listed in the table below over the past month (Exhibit 4). Department stores have been out of favor for some time. Kohl’s is performing poorly in the StarMine Analyst Revisions Model, scoring a 1 out of 100, indicating a bearish outlook. This suggests that analysts are bearish on the department store, which has experienced the most significant drop in its ARM score as analysts have revised estimates downward.
Exhibit 4: StarMine Analysts Revisions Model Score Decline: November 1 – December 5, 2024
Source: LSEG Workspace
Here are the Q3 2024 earnings and same store sales estimates for the companies reporting this week:
Exhibit 5: Same Store Sales and Earnings Estimates – Q3 2024
Source: LSEG I/B/E/S
Guidance
So far, 182 retailers have reported Q3 2024 earnings; of this group, many have cited higher prices, challenging macroeconomic conditions, and a cautious consumer as contributing factors. About 22% of retailers have also discussed the potential impact of tariffs.
Looking ahead to Q4 2024, 28 retailers issued negative preannouncements, while six issued positive EPS guidance so far (Exhibit 6). Of those retailers offering revenue guidance, 29 warned of disappointing results, while nineteen said revenue might be better than previously expected.
Exhibit 6: Earnings and Revenue Guidance: Q4 2024
Source: LSEG I/B/E/S
