Abercrombie & Fitch rallied Wednesday after trouncing quarterly views while Kohl's surged after its mixed report. Retailers Dick's Sporting Goods posted a major earnings miss early Tuesday, while Macy's topped forecasts but remains cautious about consumer spending. reports Wednesday. DKS stock dived early Tuesday, while M stock tumbled to new 2023 lows.
Experts anticipate record back-to-school spending this year as students across the country head back to classrooms and universities. Spending on grade-school and high-school supplies is expected to hit a record $41.5 billion this year, up from $36.9 billion last year and the previous high of $37.1 billion in 2021, the National Retail Federation reported in mid-July. Back-to-college spending is seen hitting $94 billion, about $20 billion more than last year's record.
In earlier retail earnings reports, Walmart reported a surprise earnings gain last week and raised its full-year targets. Target posted mixed results on Wednesday and slashed its outlook.
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Kohl's Earnings
Kohl's follows Macy's with its quarterly results early Wednesday. Adjusted earnings fell 53% to 52 cents per share. Revenue declined for the sixth straight quarter, sliding 4.8% to $3.68 billion. Analysts expected earnings to fall to 24 cents per share on $3.76 billion in net sales.
Comparable sales fell 5% to mark the sixth consecutive period of declines. Wall Street guided a 4.4% decrease in same-store sales.
Inventories decreased by about 14% to $3.47 billion.
Kohl's maintained its full-year outlook of earnings between $2.10 and $2.70 per share on a 2% to 4% decline in net sales. Analysts polled by FactSet expect full-year earnings of $2.38 per share on a 0.4% revenue decline to $17.09 billion.
KSS stock surged 5% Wednesday to recoup some of its 10.3% drop Tuesday during the retail selloff. Shares added 2% to 28.70 on Monday. Prior to Tuesday's decline, Kohl's stock was trading in a cup-with-handle base with a 29.65 buy point, according to MarketSmith. Shares pared gains to 6.7% so far this year. KSS stock hit its 2023 high of 35.77 in early February.
Abercrombie Reports
Clothing retailer Abercrombie & Fitch announced Q2 results early Wednesday. Abercrombie reported adjusted earnings of $1.10 per share, compared to a loss of 30 cents last year. Sales leapt 16.2% to $935.3 million. The results were well above Wall Street earnings predictions of 17 cents per share on $844 million in revenue.
Same-store sales climbed 13%, outpacing the 4.3% growth expected from analysts.
Abercrombie lifted its full-year guidance and now expects 10% sales growth to $3.7 billion, compared to its prior outlook of 2% to 4% growth. FactSet expects full-year adjusted earnings of $2.23 per share on $3.84 billion in revenue.
Abercrombie stock rallied 23.6% Wednesday. Shares eased 1.4% Tuesday and slumped 3.3% during trade Monday.
ANF stock is trading above a profit-taking zone following an early-June breakout from a cup base. Shares rallied about 33% after pushing above the 31.69 buy point on June 2. Abercrombie stock has bolted 121% higher since the start of the year. Still, ANF stock is trading at roughly half its record high of 85.77 from October 2007.
Retail Earnings: Macy's
Legacy department store Macy's reported sixth straight earnings decline for its Q2 results early Tuesday. Adjusted earnings fell to 26 cents from $1 per share last year. Revenue dropped 8% to $5.13 billion, marking five consecutive quarters of accelerating sales declines.
Wall Street expected an 86% drop in adjusted earnings to 14 cents per share on just over $5 billion in sales.
System-wide comparable sales worsened for the fifth quarter in a row, declining 8.2%. The results were in-line with forecasts of an 8.3% comparable sales decline.
Macy's maintained its full-year outlook and noted it continues to take a cautious approach on consumers in light of macroeconomic pressures and uncertainty. For the year, Macy's sees adjusted earnings between $2.70 and $3.20 per share on $22.8 billion to $23.2 billion in net sales. Comparable sales are seen down 7.5% to 6% compared to 2022.
FactSet forecasts full-year earnings of $2.89 per share on $23.03 billion in revenue with a 6% decline in comparable sales.
However, Macy's may see a boost from the return of Nike sales later this year. Macy's inked a deal with Nike in June to offer apparel, packs and gear starting in October.
Macy's eased another 0.6% Wednesday. M stock dropped 14% to 12.65 Tuesday to mark a new low for the year. Shares faded 2.6% Monday to trade near 14.73. Macy's stock tumbled about 39% so far in 2023.
Shares set their previous 2023 low of 12.80 on June 1 after Macy's slashed its outlook in its Q1 earnings beat.
Dick's Sporting Goods Earnings
Dick's Sporting Goods reported a 23% drop in adjusted earnings to $2.82 per share while net sales rose 3.6% to $3.22 billion. Wall Street expected a 3.5% earnings increase to $3.81 per share adjusted, on 4% revenue growth to $3.24 billion. Comparable store sales rose 1.8%, shy of forecasts of a 2.7% increase.
Q2 profitability fell short largely due to the impact of elevated inventory shrink, according to CEO Lauren Hobart in the release, "which is an increasingly serious issue impacting many retailers." Net inventories declined 5% to $2.85 billion for the quarter compared to last year.
In the earnings call, Hobart noted organized retail crime and general theft had a meaningful impact on full-year expectations.
Dick's Sporting Goods sees full-year earnings between $11.50 per share and $12.30 per share adjusted — a cut of about 10% from earlier guidance. The sports retailer guided flat comparable sales to 2% growth for the year. FactSet expects full-year earnings of $13.50 per share on a 1% increase in comparable sales.
Dick's Sporting stock inched 0.3% lower Wednesday after retreating 4.3% in early trade. DKS stock tumbled 24.1% to 111.55 Tuesday following the report. Shares had been nearing an all-time high of 152.61 from March 9 but are now trading at their lowest level since December. The move marks Dick's largest percent decrease on record, according to available Dow Jones data dating back to October 2002.
DKS stock is now down 7.6% on the year. Shares had rallied about 22.2%, through Monday, since Dec. 31.
Back-To-School Spending Spikes
Roughly 55% of back-to-school shoppers began prepping for the shopping season in early July. That's up from 44% in 2019. Families with children from elementary to high school plan to spend an average $890.07 on back-to-school items, up about $25 from last year's record. College student's average costs are expected to increase to $1,366.95 per person, up from the previous record of $1,200.32 in 2021. Back-to-college spending nearly doubled since 2019, the NRF reported.
Much of that spending is driven by demand for electronics and other computer-related accessories, which are expected to reach a spending record of $15.2 billion.
"Back-to-class shopping is one of the most important consumer shopping occasions of the year," NRF CEO Matthew Shay said in the release. "Retailers have been preparing for months to ensure they are well stocked with essential items that families and students need for the school year."
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