Inside Look at Retail: Mixed Reports Across Multiple Industries as Earnings Season Slows – TGT, AZO, LOW, M
Despite headline news amping up for the big NVIDA Corp (NVDA) announcement tomorrow after the close, there have been some notable retail announcements contributing to this week’s tail end of earnings season.
A good mix of retail companies have reported this week that have given investors an insight into the health of certain industries within the sector, in addition to further color on the state of the consumer.
Hitting an Earnings Bullseye
Yesterday the mega-retailer, Target Corporation (TGT) announced positive Q4 financials with EPS crushing estimates by over $0.50. Q4 EPS was reported $2.98 vs FactSet $2.42 and revenues for the quarter came in at $31.92B vs FactSet $31.83B. Shares moved higher after the Q4 beat with margins a bright spot and guidance coming in better than feared. The company intends to slash prices on over 5,000 products setting itself up to compete toe-to-toe with America’s largest retailer, Walmart (WMT) who also announced positive earnings last week. Additionally, Target intends to launch a new membership program that should win more wallet share.
Revving Up for Summer
Automotive retailer and distributor, AutoZone, Inc. (AZO) announced Q3 financials that beat Q3 EPS estimates ($36.69 vs FactSet $36.02) but came in slightly lower on revenue ($4.24B vs FactSet $4.29B). Total company same store sales increased by 0.9%, which mostly driven by its international business. Domestic same store sales disappointed and were mostly flat as US business was impacted negatively by tax refunds and seasonality from cooler than normal weather. The company intends to execute on its all-important summer selling season as it enhances inventory and accelerates the domestic commercial business.
Improvements Needed
Home retailer, Lowes Corporation, Inc. (LOW) seemed to echo its counterpart, Home Depot (HD) in its Q1 financial release, this morning. The company beat on EPS $3.06 vs FactSet $2.95 and revenues $21.3B vs FactSet $21.1B. FY 2024 guidance was reaffirmed across the board. However, despite the headline beat, same-store sales declined for their 6th consecutive quarter and earnings fell 17%. Lowes, like Home Depot, also saw a decline in DIY big ticket discretionary spending that was somewhat offset by positive comp sales in its Pro and online categories.
Parading A Turnaround Story
Macy’s, Inc. (M) reported Q1 financial results that topped earnings estimates (EPS $0.27 vs FactSet $0.16) and saw strength in its luxury and beauty sales as its turnaround plan has started to show success. The company who is in the process of closing 150 of its stores through 2026, still saw profit declines but feel strongly about its “Bold New Chapter” sales strategy which, resulted in sales near the high end of their outlook. Macy’s exceeded Q2 guidance expectations as well, citing its Q2 EPS range at $0.25 – $0.33 vs FactSet $0.21.
