ISHP - Q4 2022 U.S. Retail Scorecard - Update Feb. 20 2023
Summary
- To date, 103 of the 201 companies in our Retail/Restaurant Index have reported their EPS results for Q4 2022, representing 51% of the index.
- All eyes are on Walmart and Home Depot as they kick off Q4 retail earnings season.
- Walmart’s e-commerce is expected to grow a robust 16.3%, while Home Depot is expected to see 1.5% e-commerce growth for Q4 2022.
By Jharonne Martis
To date, 103 of the 201 companies in our Retail/Restaurant Index have reported their EPS results for Q4 2022, representing 51% of the index. Of those companies that have reported their quarterly results, 63% announced that profits beat analysts’ expectations, while 4% delivered on-target results and 33% reported earnings that fell below estimates. The Q4 2022 blended earnings growth estimate now stands at -22.8%.
The blended revenue growth estimate for the 201 companies in this index is 5.2% for Q4 2022. Of those companies that have reported their quarterly results so far, 61% announced revenue that exceeded analysts’ expectations and the remaining 39% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: Refinitiv Earnings Dashboard
Source: I/B/E/S data from Refinitiv
This week: Q4 2022 earnings
Retail sales and earnings are in focus this week. All eyes are on Walmart ( WMT ) and Home Depot ( HD ) as they kick off Q4 retail earnings season. Walmart and Home Depot are on track to report Same Store Sales ((SSS)) growth of 4.6% and 0.6%, respectively (Exhibit 2).
Exhibit 2: Walmart and Home Depot Same Store Sales, Earnings, Revenue Estimates - Q4 2022
Source: I/B/E/S data from Refinitiv
The discount giant is on track to post 4.5% revenue growth. However, its earnings are expected to drop -1.2%. Analysts have been revising their SSS upwards throughout the quarter as consumers continue to trade down and face rising grocery prices. As higher inflation looms, consumers have been holding back on general merchandise spending. However, grocery sales at Walmart can help offset this weakness. Although leaner inventory levels are expected at Walmart, there’s been a rise in promotional levels while higher cost pressures continue to rise and eat the bottom line.
Meanwhile, this week’s earnings results from Home Depot will be a key indicator of the state of the housing market. Home Depot’s revenue is on track to post a 0.7% revenue growth, while earnings are expected to grow by 2.1%. The home improvement sector is experiencing a slowdown in DIY, softening in pro business, and warmer weather compared to a year ago.
During the pandemic, retailers saw online sales spikes. This quarter’s e-commerce estimates show a single-digit growth, suggesting these retailers are maintaining these sales levels. Walmart’s e-commerce is expected to grow a robust 16.3%, while Home Depot is expected to see 1.5% e-commerce growth for Q4 2022 (Exhibit 3).
Exhibit 3: Digital Sales Growth Estimates - Q4 2022
Source: Eikon Workspace
The following chart displays estimates of earnings and same-store sales expectations for retailers that are scheduled to release their Q4 2022 results this week.
Exhibit 4: Same Store Sales and Earnings Estimates - Q4 2022
Source: I/B/E/S data from Refinitiv
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Q4 2022 U.S. Retail Scorecard - Update Feb. 20, 2023