Never Short A Dull Market

Retailers selling discretionary items like electronics and appliances have struggled to satisfy investors after red-hot results during the pandemic. But, some signs are emerging that expectations might’ve gotten low enough, and results may be beginning to bottom out. 🤔

Today we heard from Best Buy, which reported adjusted EPS was $1.38 vs. the $1.03 expected and revenues of $10.59 billion vs. the $10.31 billion expected. 

Sales continued to decline against most of its product categories, with the largest declines in computing and home theater. However, revenue is higher than pre-pandemic levels as shoppers spend more per item. Additionally, same-store sales declines of 10.4% were less than the 12.9% expected, giving investors hope that sales could be turning a corner.

Despite the uncertain macroeconomic environment and lack of clarity on consumer spending, the company is sticking by its holiday outlook. Granted, that forecast was already slashed this summer, but investors are cheering the lack of further reductions. Inventory levels are also returning to pre-pandemic levels, showing that the company may be positioned better than in previous quarters. 

These positive improvements sent $BBY shares up 13% today. 👍

Dick’s Sporting Goods surprised investors today by reporting record third-quarter sales and raising its full-year guidance. 😮

The retailer saw comparable store sales rise 6.5%, with net sales rising 7.7% YoY. Its pre-tax income as a percentage of net sales was 10.3%, more than 2.5x results from the same quarter in 2019.

As for the future, the company raised its full-year 2022 comparable store sales guidance to -3.0% to -1.5%, up from -6.0% to -2.0%. It also raised its earnings guidance significantly as the structural changes to its strategy continue to play out.

Overall, the news sent $DKS shares higher by 10% and towards the top of their 1-year price range. 📈

Clothing retailers continue to surprise to the upside this quarter. Let’s take a look at today’s winners.

First is the off-price retailer Burlington Stores, which experienced a weak quarter but offered investors an upbeat 2023 outlook. 📆

The company said a challenging macroeconomic environment is a factor, noting its higher exposure to low-income consumers who are affected most by inflation. With that said, it also acknowledged some of its own missteps. CEO Michael O’Sullivan said it’s taking steps to improve its product mix and provide it an opportunity to raise prices and boost margins shortly. 

Unlike its rivals, the company saw an uptick in sales in October and into November, allowing it to reaffirm its Q4 guidance. However, for next year it expects the improvements it’s making to result in stronger-than-previously-forecasted revenue and earnings.

Investors appear to be looking ahead, with $BURL shares rising over 20% today. 🔺

Meanwhile, mall retailer Abercombie & Fitch reported better-than-expected earnings and revenue.

The company’s $880.1 million beat expectations of $831.1 million, while a $0.01 in earnings beat the $0.14 loss expected.

Like other retailers, the company is cautiously optimistic about the holiday shopping season and says its inventory position is much better than last year’s. As a result of the improvements, it raised its full-year outlook to net sales of -2% to -3% vs. the mid-single-digit drop forecasted.  👍

Lastly, the company announced that Terry Burman is stepping down as Chairperson of the Board in January. The current director and chair of the Nominating and Board Governance Committee, Nigel Travis, will replace him.

Overall, the subtle improvements boosted $ANF shares by 22% today. 📈