Retail Earnings: How Dick’s Sporting Goods, Nordstrom and More Are Faring Right Now
Tomorrow marks a big earnings day for retail.
From Nordstrom and Gap to Dick’s Sporting Goods, some of apparel and footwear’s biggest chains are set to announce third-quarter profits and revenues. The financial reports come at a trying time for the sector, which is contending with another wave of the COVID-19 outbreak as the all-important holiday shopping season is fast approaching.
A day ahead of the quarterly releases, FN rounds up Q3 predictions, the happenings of the past three-month period and what traders are on the lookout for in the weeks ahead.
Dick’s Sporting Goods Inc.
Analysts’ forecasts: EPS of 98 cents and revenues of $2.22 billion
Last quarter’s performance: The sporting goods retailer delivered a second-quarter earnings and sales blowout. Same-store sales rose 20.7%, even as about 15% of its brick-and-mortar outposts were closed on average during the period. Its e-commerce business — including those made through its contactless curbside pickup service — surged 194%.
What to watch: Dick’s ScoreCard loyalty program engaged more than 20 million active users, who collectively accounted for more than 70% of sales during its second quarter. Beyond that, analysts are keeping an eye on the strength of the chain’s online sales and whether it continues to benefit from macroeconomic factors like increased outdoor and fitness activities particularly during a resurgence in coronavirus infections.
Burlington Stores Inc.
Analysts’ forecasts: EPS of 16 cents and revenues of $1.53 billion
Last quarter’s performance: The off-price chain logged mixed profits and revenues as store closures and inventory issues plagued its business in the second quarter. At the time, sales at its reopened stores dropped 14% from the date that they resumed business to the end of the three-month period.
What to watch: CEO Michael O’Sullivan warned that management sees “a lot of risk” in the third quarter, particularly in adjusting its inventories for the holidays. “In this uncertain environment, we plan to manage our business conservatively,” he said. “We have plenty of liquidity, and we will use this to support opportunistic buys of fall merchandise and of pack and hold inventory that we will flow to stores next year.”
Dollar Tree Inc.
Analysts’ forecasts: EPS of $1.15 and revenues of $6.12 billion
Last quarter’s performance: Together, the namesake chain and sister Family Dollar posted better-than-anticipated second-quarter earnings. However, it noted a decline in customer visits during the three months, even as same-store sales improved 7.2%. (Dollar Tree’s comps advanced 3.1%, while those at Family Dollar climbed 11.6%.)
What to watch: As the pandemic took hold in the U.S., higher spending on discretionary purchases drove sales at essential retailers like Dollar Tree and Family Dollar. A spike in the number of COVID-19 cases could lead to another boost in home goods and supplies, while the upcoming holiday season could grow the business’ party and celebration categories. The company is also in the midst of adding new brick-and-mortar locations and expects to complete 500 openings by the end of the fiscal year.
The Gap Inc.
Analysts’ forecasts: EPS of 31 cents and revenues of $3.82 billion
Last quarter’s performance: Gap Inc. — parent to its namesake brand, as well as the Old Navy, Banana Republic and Athleta banners — beat earnings and sales predictions as its online business nearly doubled to more than 3.5 million new customers year over year. It saw a 95% increase in online sales, while comps were up 13%.
What to watch: The retail group’s “fleet optimization” involves the closures of roughly 350 of its Gap and Banana Republic units in North America by 2023’s end, with 75% of those locations expected to shut down by the end of the 2021 fiscal year. The strategy, it explained, is meant to help the company return to “profitable growth” next year.
Nordstrom Inc.
Analysts’ forecasts: Loss per share of six cents and revenues of $3.1 billion
Last quarter’s performance: The department store’s balance sheet took a huge hit as the pandemic kept its stores shuttered for half the quarter and led it to postpone its highly anticipated Anniversary Sale. During the first quarter, Nordstrom cut back on its inventory by more than 25% to mitigate markdowns on seasonal items as well as bring in new products for shoppers.
What to watch: Despite the Q2 2020 miss, president and chief brand officer Pete Nordstrom said he was “confident” that the company could improve sales trends in the second half of the year “and beyond.” Analysts are watching the retailer’s merchandise margin trends and inventory receipts. The quarter will factor in the Anniversary Sale, which began on Aug. 4 with early access for members of its loyalty program Nordy Club, and expanded to include all shoppers on Aug. 19.
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