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Do Mixed Q3 Retail Earnings Indicate a Tepid Holiday Shopping Season?

Sheraz Mian

The earnings focus lately has been on the traditional Retail players, whose performance has at best been mixed. While Wal-Mart (WMT), Target (TGT) and a few others did really well, many others fell in the category of Macy’s (M) and Kohl’s (KSS) who struggled to operate profitably and efficiently in the current environment of online sales becoming an ever bigger slice of the overall sales pie.

Looking at the sector as a whole, fewer retailers were able to beat EPS and revenue estimates in Q3, as the chart below shows.

The consumer spending environment continues to remain positive, which sets us up for a strong holiday shopping season. However, not all retailers will be able to capitalize on this favorable backdrop.

For Q3 as a whole, total Q3 earnings for the S&P 500 index are track to be down -1.8% from the same period last year on +4.3% higher revenues.

Estimates for the current period (2019 Q4) have been coming down since the quarter got underway, but the magnitude of negative revisions is within historical ranges.

For more details about the Q3 Earnings Season and expectations for the coming periods, please check out our weekly Earnings Trends  report >>>>>> Weak Retail Sector Earnings

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Walmart Inc. (WMT) : Free Stock Analysis Report
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