To date, 181 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 3.7% 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
As predicted by StarMine, The Gap exceeded its Q2 earnings and revenue estimates. The apparel retailer also met its Q2 same-store sales (SSS) estimates, driven primarily by its Old Navy division. Gap noted, “Our strategic pursuit to lead in the active category is paying off with sizable market share gains.” (Source: Gap Q2 2024 Earnings Call).In contrast, Lululemon faced increased competition in the U.S. and fell short of its Q2 revenue estimate. The athletic wear company also missed its 6.1% SSS estimate, reporting only a 2.0% SSS result, its lowest in seven years.Similarly, Ulta Beauty missed its Q2 earnings, revenue, and SSS estimates. The beauty retailer reported a -1.2% SSS, its lowest since the height of the pandemic, as consumers became more cautious about discretionary spending. Increased competition is also impacting demand for prestige beauty products.During its earnings call, Ulta echoed a common theme this earnings season: “Consumer behavior is starting to shift as consumers increasingly focus on value and become more cautious with their spending.” (Source: Ulta Q2 2024 Earnings Call).Retailers continue to cite a cautious environment and a value-oriented consumer. Ollie’s Bargain Outlet and Burlington have benefited from this trend, reporting strong comps of 5.8% and 5.0%, respectively.Conversely, Dollar General missed its revenue, earnings, and SSS estimates. The low-end consumer, Dollar General’s core market, is struggling with inflation and is forced to “sacrifice on purchasing basic necessities due to the higher cost of those items, in addition to paying more for expenses such as rent, utilities and health care. More of our customers report that they are now resorting to using credit cards for basic household needs, and approximately 30% have at least one credit card that has reached its limit. And in our latest survey, 25% of our customers surveyed noted they anticipated missing a bill payment in the next six months.” (Source: Dollar General Q2 2024 Earnings Call).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/SLooking ahead to next week, Dollar Tree is expected to report a 1.5% SSS for Q2. The low-end consumer has been particularly affected by the current economic climate, leading analysts polled by LSEG to be pessimistic about the discounter’s Q2 earnings performance.Conversely, Dick’s Sporting Goods is projected to report a healthy 3.6% comp, an improvement from last year’s 1.8%. The active category continues to perform well. The sporting goods retailer has positive stock momentum, with a Price Momentum Model (PriceMo) score of 91, suggesting further stock price increases (Exhibit 3).Additionally, Dick’s scores a notable 97 out of 100 on the Smart Holdings Model, indicating growing optimism from Buy-side analysts. Its high return on equity (ROE) and positive price momentum make it a compelling investment choice. It’s impressive score of 97 out of 100 on the StarMine Earnings Quality (EQ) Model, also reflects sustainable earnings.

Exhibit 3: Dick’s Sporting Goods StarMine Models Scores
Source: LSEG WorkspaceMore By This Author:Friday Facts: Will The Growth Of Passive Equity Products Start To Hurt Active Managers? Dollar General Is Being Nickel-And-Dimed S&P 500 Earnings Dashboard 24Q2 – Friday, Aug. 30