The following research was contributed to by Christine Short, VP of Research at Wall Street Horizon.
- After a mixed week of results, S&P 500 EPS growth for Q1 2023 falls slightly from last week, now set to come in at -2.5%
- Potential earnings surprise this week: Boohoo Group (BHOOY)
- Retailers out in full force this week: HD, LOW, TGT, WMT, TJX, ROST, FTCH
- Earnings season winds down, 1,244 companies expected to report this week
Two key inflation readings came in below expectations last week just as the markets were readying themselves for a slew of retail earnings reports. On Wednesday, the Consumer Price Index showed a 4.9% increase for April on a YoY basis, below the 5% estimate, while the monthly increase of 0.4% was in-line with expectations. On Thursday, the Producer Price Index showed a yearly increase of 0.2%, also falling slightly below the expectation for 0.3%. Although inflation is increasing more slowly, investors took it as further proof that a recession is imminent, pouring into treasuries and big tech stocks as a result.
Other concerns on investors’ minds included softening jobs data and a banking crisis that continues to unfold. On Thursday, US Initial jobless claims increased to 264,000 for the week ending May 6, the highest reading since October 20, 2021. Also on Thursday, PacWest Bancorp revealed in their 10Q filing that deposits plunged 9.5% in the previous week. All this worry caused cyclicals to dip mid-week, as investors continue to favor tech behemoths as a safe haven in this environment, a reversal from last year’s playbook which supported value stocks.
An early read on the state of the consumer came last week as a handful of retailers and apparel names released Q1 results. While names like Under Armour and Dillard’s beat both top and bottom-line expectations, it was Under Armour’s weakened guidance and Dillard’s same store sales decline that investors were paying attention to. On the flipside, Tapestry (parent company of Coach, Kate Spade) delivered stellar results due to higher sales in China which led to an increase in the full year profit forecast.
The continued trend that has seen a majority of S&P 500 companies beating first quarter expectations helped lift the overall EPS growth rate to -2.5%, an improvement from the -6.5% estimated a month ago.¹
On Deck this Week:
We’ll continue to get updates on the US consumer this week when the retail earnings parade kicks off with reports from Home Depot (HD), Lowe’s (LOW), Target (TGT), Walmart (WMT), Ross Stores (ROST), TJX Companies (TJX), Farfetch (FTCH) and more.
Potential Earnings Surprise this Week – Boohoo Group
Boohoo Group (BHOOY)
Company Confirmed Report Date: Tuesday, May 16, Unspecified
Projected Report Date (based on historical data): Wednesday, May 3
DateBreaks Factor: -3*
The Gen Z fashion brand beloved by TikTokers, Boohoo Group, reports H2 2023 results this week, nearly two weeks later than expected.
The British online fashion retailer and parent of brands such as PrettyLittleThing, boohooMAN and Nasty Gal, has had a rough year. During their H1 2023 release in September they warned that full year sales would fall 10% on account of a worsening macro-economic and consumer backdrop.
Peer fast fashion retailer ASOS reported interim results last Wednesday to a similar tune, sales fell 8% for H2 2023. High inflation has squeezed margins and profits as well as customer purchasing power, with customers buying less and returning more. As a result, ASOS enacted major cost cutting and price increase initiatives, which could be a route BHOOY takes when they report Tuesday.
Q1 Earnings Wind Down
Last week marked the final peak week of the Q1 2023 earnings season, with 79% of our universe now having reported. This week we will see 1,244 companies release results, mostly from the consumer discretionary and tech sectors.
Source:
¹ https://advantage.factset.com/hubfs
For more information on the data sourced in this report, please email: info@wallstreethorizon.com
Wall Street Horizon provides institutional traders and investors with the most accurate and comprehensive forward-looking event data. Covering 9,000 companies worldwide, we offer more than 40 corporate event types via a range of delivery options from machine-readable files to API solutions to streaming feeds. By keeping clients apprised of critical market-moving events and event revisions, our data empowers financial professionals to take advantage of or avoid the ensuing volatility.
Christine Short, VP of Research at Wall Street Horizon, is focused on publishing research on Wall Street Horizon event data covering 9,000 global equities in the marketplace. Over the past 15 years in the financial data industry, her research has been widely featured in financial news outlets including regular appearances on networks such as CNBC and Fox to talk corporate earnings and the economy.
Twitter: @ChristineLShort
The author may hold positions in mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
