Trying to anticipate retail earnings is harder than trying to understand why your Tinder date ghosted you after saying things went “great” on your first date. But I’m not bitter.
Kohl’s and Home Depot reported earnings that scream “Sears circa 2017” yesterday. Kohl’s share price dropped 19% by the close on Tuesday, and Home Depot fell more than 5%. Home Depot’s decline led the Dow to what feels like its first loss since Labor Day.
It wasn’t all bad news yesterday, though. TJ Maxx announced a 4% jump in comparable sales from Q3 last year, as the island of misfit clothes appears to have become the Amazon of clothing nobody really wants (but will definitely settle for at the right price). Shares rose nearly 2%.
So, what happened?
The holiday season quickly approaching means two things: 1) mall Santas are prepping for busy szn, and 2) Q3 retail filings chock full of disappointment and year-end expectations are coming in hot.
Kohl’s reported that unseasonably warm weather resulted in competitors offering discounts on outerwear products… leading it to follow suit (read: lower sales, duh). “If other retailers jumped off a bridge, would you?!”
But Kohl’s biggest issue wasn’t what it did in Q3. The preferred retailer of moms in the rust belt revised earnings per share guidance to a $4.75 to $4.95 range from $5.15 to $5.45.
Home Depot’s situation doesn’t seem to be as dire. The go-to Saturday morning spot for suburban dads named Hal showed same-store sales growth of 3.6% in Q3… but that number came in below estimates of 4.6%.
According to HD, the miss was caused by a delayed impact from business investments, like the company’s new online ordering, store remodels, and a new service being offered to contractors. The home of “More Saving, More Doing” has had a good track record, though, and investors are expecting the company to bounce back thanks to steady home demand, the eventual benefit from business investments coming to fruition… and the popularity of Chip and Joanna Gaines.
The bottom line…
The US economy has been buoyed largely by consumer spending, but it remains to be seen how long Americans will continue to put the team on their back. It’s going to be a short holiday season this year, and a poor showing could be bad for business. Target and Macy’s are set to report earnings later this week.
Bottom line: “Tis the season for disappointing earnings…”