Retailers are hot again — here are the earnings and sales winners

For a time it seemed as if the entire U.S. retail landscape would eventually get squashed by Amazon.com.

But all of a sudden retailers are reporting surprising news: Consumers have ramped up spending, which has sent their sales, and shares, soaring.

We’ll look at the data behind the excitement and list this quarter’s earnings winners and sales winners.

The federal tax cuts signed into law by President Trump in December weren’t fully implemented by U.S. companies until the middle of the first quarter. So second-quarter earnings season was the first to incorporate the full effect of the tax cuts. That helped earnings, while strong consumer spending powered sales.

We’re going to show several sets earnings and sales data for retail companies included in the S&P 1500 Composite Index, which is made up of the large-cap S&P 500 SPX, -0.09% the S&P 400 Mid-Cap Index MID, -0.18% and the S&P 600 Small-Cap Index SML, -0.18%

Starting with the S&P 1500 Composite Index, we arrived at a list of 83 retail companies, including Amazon.com AMZN, +0.22% and other online retail specialists. First we’ll look at earnings growth and then sales growth.

Second-quarter earnings season is nearly over; however, many companies have fiscal quarter end dates that do not match the calendar, especially in the retail world. So these comparisons are for each company’s most recently reported quarter through Aug. 22, from a year earlier.

Unfortunately, a company’s bottom-line earnings for any one quarter can be confusing because it might be grossly distorted by one-time accounting charges, as well as extraordinary expenses from restructuring, legal settlements or any number of corporate events. This is why investors focus on so many other metrics, including sales growth, comparable-store sales growth, profit margins, etc.

With that said, here are the 20 S&P 1500 profitable retail companies showing the largest increases in quarterly net income according to reports filed through Aug. 22:

CompanyTickerNet income – most recently reported quarter ($mil)Net income – year-earlier quarter ($mil)Increase in net incomeEPS – most recently reported quarterEPS – year-earlier quarterIncrease in EPS
Amazon.com Inc. AMZN, +0.22%$2,534.0$197.01,186%$5.07$0.401,168%
Tailored Brands Inc. TLRD, -0.05%$13.9$1.8656%$0.27$0.04575%
Kroger Co. KR, +0.65%$2,005.0$301.0566%$2.37$0.33628%
Five Below Inc. FIVE, +0.83%$21.8$8.4160%$0.39$0.15160%
Medifast Inc. MED, +0.71%$14.1$7.686%$1.16$0.6384%
Urban Outfitters Inc. URBN, +3.45%$92.8$49.986%$0.84$0.4491%
Ralph Lauren Corp. Class A RL, +0.47%$109.0$59.583%$1.31$0.7282%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%$30.5$19.061%$0.46$0.2959%
Shoe Carnival Inc. SCVL, +0.59%$12.9$8.159%$0.83$0.4873%
American Eagle Outfitters Inc. AEO, -0.07%$39.9$25.258%$0.22$0.1457%
Tiffany & Co. TIF, +0.04%$142.3$92.953%$1.14$0.7454%
Michael Kors Holdings Ltd. KORS, +0.27%$186.4$125.549%$1.22$0.8053%
Nordstrom Inc. JWN, +1.77%$162.0$110.047%$0.95$0.6546%
Group 1 Automotive Inc. GPI, -0.82%$54.5$37.745%$2.72$1.8448%
Macy’s Inc. M, +0.96%$166.0$116.043%$0.53$0.3839%
Kohl’s Corp. KSS, +1.80%$292.0$208.040%$1.76$1.2442%
Tapestry Inc. TPR, +0.04%$211.7$151.740%$0.73$0.5338%
Sonic Automotive Inc. Class A SAH, -1.35%$17.1$12.339%$0.39$0.2744%
PetMed Express Inc. PETS, +0.40%$12.6$9.336%$0.62$0.4538%
Asbury Automotive Group Inc. ABG, -1.30%$43.2$31.935%$2.11$1.5239%
Source: FactSet

You can click on the tickers for more information about each company, including corporate profiles, news, charts and financials.

As you can see, this approach can lead to some very large swings in earnings, especially if profits in the year-earlier quarter were low. We have also included changes in earnings per share, as these reflect any dilution from the issuance of new shares, as well as any boosts to EPS from buybacks.

Amazon leads the list for earnings growth, although investors over the long term have grown used to the company typically showing low profitability as it invests in various business units.

It is, of course, good to see earnings go up so significantly. But again, keeping in mind the potential distortion of earnings results, sales figures can be much more useful. Here are sales growth figures for the same group of 20 “retail earnings winners”:

CompanyTickerSales – most recently reported quarter ($mil)Sales – year-earlier quarter ($mil)Increase in salesSales per share – most recently reported quarterSales per share – year-earlier quarterChange in sales per share
Amazon.com Inc. AMZN, +0.22%$52,886$37,95539%$105.77$77.1437%
Tailored Brands Inc. TLRD, -0.05%$818$7834%$16.13$15.931%
Kroger Co. KR, +0.65%$37,530$36,2853%$44.36$39.2313%
Five Below Inc. FIVE, +0.83%$296$23327%$5.29$4.2126%
Medifast Inc. MED, +0.71%$117$7655%$9.64$6.2853%
Urban Outfitters Inc. URBN, +3.45%$992$87314%$8.99$7.6717%
Ralph Lauren Corp. Class A RL, +0.47%$1,391$1,3473%$16.69$16.332%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%$276$22821%$4.20$3.5319%
Shoe Carnival Inc. SCVL, +0.59%$257$2532%$16.58$15.0710%
American Eagle Outfitters Inc. AEO, -0.07%$823$7628%$4.62$4.1910%
Tiffany & Co. TIF, +0.04%$1,033$90015%$8.27$7.1815%
Michael Kors Holdings Ltd. KORS, +0.27%$1,203$95226%$7.89$6.0730%
Nordstrom Inc. JWN, +1.77%$4,067$3,7937%$23.88$22.516%
Group 1 Automotive Inc. GPI, -0.82%$2,943$2,67210%$146.84$130.2113%
Macy’s Inc. M, +0.96%$5,758$5,5524%$18.46$18.112%
Kohl’s Corp. KSS, +1.80%$4,570$4,14410%$27.53$24.6712%
Tapestry Inc. TPR, +0.04%$1,484$1,13431%$5.09$3.9828%
Sonic Automotive Inc. Class A SAH, -1.35%$2,506$2,4064%$58.38$53.699%
PetMed Express Inc. PETS, +0.40%$87$8010%$4.27$3.9010%
Asbury Automotive Group Inc. ABG, -1.30%$1,724$1,6326%$84.08$77.708%
Source: FactSet

The sales figures can be much more meaningful than one quarter’s worth of earnings figures that have been affected so dramatically by tax cuts. Here’s one more table to shed light on the quality of the sales figures for our retail earnings winners — gross margin, along with total return figures for the stocks:

CompanyTickerGross income margin – most recently reported quarterGross income margin – year-earlier quarterTotal return – 2018 through Aug. 22Total return – 3 years
Amazon.com Inc. AMZN, +0.22%42.08%38.21%63%285%
Tailored Brands Inc. TLRD, -0.05%42.21%42.64%2%-55%
Kroger Co. KR, +0.65%19.79%20.03%17%-5%
Five Below Inc. FIVE, +0.83%29.68%28.55%71%221%
Medifast Inc. MED, +0.71%75.69%76.08%221%767%
Urban Outfitters Inc. URBN, +3.45%35.85%34.06%30%51%
Ralph Lauren Corp. Class A RL, +0.47%60.23%62.50%34%32%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%39.93%39.83%48%329%
Shoe Carnival Inc. SCVL, +0.59%30.04%28.48%33%40%
American Eagle Outfitters Inc. AEO, -0.07%31.90%31.16%55%100%
Tiffany & Co. TIF, +0.04%62.80%62.39%26%61%
Michael Kors Holdings Ltd. KORS, +0.27%58.20%55.14%18%85%
Nordstrom Inc. JWN, +1.77%36.34%35.38%30%-6%
Group 1 Automotive Inc. GPI, -0.82%14.32%14.62%14%-4%
Macy’s Inc. M, +0.96%42.34%35.93%53%-27%
Kohl’s Corp. KSS, +1.80%37.72%33.54%48%73%
Tapestry Inc. TPR, +0.04%67.99%66.55%18%86%
Sonic Automotive Inc. Class A SAH, -1.35%13.51%14.08%21%8%
PetMed Express Inc. PETS, +0.40%33.64%33.81%-16%153%
Asbury Automotive Group Inc. ABG, -1.30%15.62%15.88%20%-2%
FactSet

A company’s gross margin is its sales, less the cost of goods sold, divided by sales. It does not take overhead expenses into account but gives an indication of whether a company is being forced to lower its prices to increase sales or defend against competitors. If a company is showing a high level of sales growth while expanding the gross margin (as Amazon has done), it is a very good sign.

Here are the same three sets of data, this time for the S&P 1500 retail companies showing the largest increase in quarterly sales, rather than earnings. There is, of course, some overlap with the earnings winners.

Here are the 20 S&P 1500 retail companies showing the largest increases in quarterly sales, according to reports filed through Aug. 22:

CompanyTickerSales – most recently reported quarter ($mil)Sales – year-earlier quarter ($mil)Increase in salesSales per share – most recently reported quarterSales per share – year-earlier quarterChange in sales per share
Medifast Inc. MED, +0.71%$117$7655%$8.12$6.2829%
Amazon.com Inc. AMZN, +0.22%$52,886$37,95539%$102.49$77.1433%
Supervalu Inc. SVU, -0.19%$4,755$3,51735%$94.58$104.19-9%
Tapestry Inc. TPR, +0.04%$1,484$1,13431%$4.56$3.9814%
Five Below Inc. FIVE, +0.83%$296$23327%$9.06$4.21115%
Michael Kors Holdings Ltd. KOR, +0.00%$1,203$95226%$7.65$6.0726%
Lithia Motors Inc. Class A LAD, -1.10%$3,097$2,46726%$105.72$98.268%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%$276$22821%$5.46$3.5354%
Murphy USA Inc. MUSA, -1.00%$3,829$3,21119%$95.24$87.119%
Ulta Beauty Inc. ULTA, +2.35%$1,544$1,31517%$31.61$21.0150%
Tiffany & Co. TIF, +0.04%$1,033$90015%$10.68$7.1849%
Walgreens Boots Alliance Inc. WBA, -0.26%$34,334$30,11814%$33.17$27.8219%
Zumiez Inc. ZUMZ, +0.33%$206$18114%$12.35$7.3768%
Urban Outfitters Inc. URBN, +3.45%$992$87314%$7.80$7.672%
Casey’s General Stores Inc. CASY, -1.03%$2,089$1,84613%$54.14$46.8216%
Costco Wholesale Corp. COST, +0.28%$32,361$28,86012%$74.72$65.4314%
TJX Cos. TJX, +1.53%$9,331$8,35812%$13.70$12.896%
Sprouts Farmers Markets Inc. SFM, -0.10%$1,322$1,18412%$9.62$8.4913%
Office Depot Inc. ODP, -0.90%$2,628$2,36311%$5.03$4.4413%
Abercrombie & Fitch Co. Class A ANF, +1.27%$731$66111%$16.96$9.7175%
Source: FactSet

Before showing the earnings results for the sales winners, here are gross margins and total returns for the group:

CompanyTickerGross income margin – most recently reported quarterGross income margin – year-earlier quarterTotal return – 2018 through Aug. 22Total return – 3 years
Medifast Inc. MED, +0.71%75.69%76.08%221%767%
Amazon.com Inc. AMZN, +0.22%42.08%38.21%63%285%
Supervalu Inc. SVU, -0.19%9.00%12.25%49%-45%
Tapestry Inc. TPR, +0.04%67.99%66.55%18%86%
Five Below Inc. FIVE, +0.83%29.68%28.55%71%221%
Michael Kors Holdings Ltd. KORS, +0.27%58.20%55.14%18%85%
Lithia Motors Inc. Class A LAD, -1.10%14.27%14.64%-22%-13%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%39.93%39.83%48%329%
Murphy USA Inc. MUSA, -1.00%2.99%4.13%10%74%
Ulta Beauty Inc. ULTA, +2.35%36.32%36.20%5%44%
Tiffany & Co. TIF, +0.04%62.80%62.39%26%61%
Walgreens Boots Alliance Inc. WBA, -0.26%21.37%22.35%-2%-14%
Zumiez Inc. ZUMZ, +0.33%30.34%28.73%44%30%
Urban Outfitters Inc. URBN, +3.45%35.85%34.06%30%51%
Casey’s General Stores Inc. CASY, -1.03%16.64%18.75%5%15%
Costco Wholesale Corp. COST, +0.28%13.07%13.48%24%77%
TJX Cos. TJX, +1.53%28.89%29.10%40%55%
Sprouts Farmers Markets Inc. SFM, -0.10%26.73%26.89%0%25%
Office Depot Inc. ODP, -0.90%22.68%23.06%-3%-53%
Abercrombie & Fitch Co. Class A ANF, +1.27%54.70%52.43%65%97%
Source: FactSet

Here’s how sales winners’ quarterly earnings changed:

CompanyTickerNet income – most recently reported quarter ($mil)Net income – year-earlier quarter ($mil)Change in net incomeEPS – Most recently reported   quarterEPS – year-earlier quarterChange in EPS
Medifast Inc. MED, +0.71%$14.1$7.686%$1.16$0.6384%
Amazon.com Inc. AMZN, +0.22%$2,534.0$197.011,86%$5.07$0.401,168%
Supervalu Inc. SVU, -0.19%-$27.0$8.0N/A-$0.55$0.28N/A
Tapestry Inc. TPR, +0.04%$211.7$151.740%$0.73$0.5338%
Five Below Inc. FIVE, +0.83%$21.8$8.4160%$0.39$0.15160%
Michael Kors Holdings Ltd. KORS, +0.27%$186.4$125.549%$1.22$0.8053%
Lithia Motors Inc. Class A LAD, -1.10%$60.7$53.214%$2.44$2.1215%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.46%$30.5$19.061%$0.46$0.2959%
Murphy USA Inc. MUSA, -1.00%$51.8$55.5-7%$1.58$1.515%
Ulta Beauty Inc. ULTA, +2.35%$164.4$128.228%$2.70$2.0532%
Tiffany & Co. TIF, +0.04%$142.3$92.953%$1.14$0.7454%
Walgreens Boots Alliance Inc. WBA, -0.26%$1,342.0$1,162.015%$1.35$1.0726%
Zumiez Inc. ZUMZ, +0.33%-$2.6-$4.4N/A-$0.10-$0.18N/A
Urban Outfitters Inc. URBN, +3.45%$92.8$49.986%$0.84$0.4491%
Casey’s General Stores Inc. CASY, -1.03%$19.3$30.1-36%$0.51$0.76-33%
Costco Wholesale Corp. COST, +0.28%$750.0$700.07%$1.70$1.597%
TJX Cos. TJX, +1.53%$739.6$553.034%$1.17$0.8538%
Sprouts Farmers Markets Inc. SFM, -0.10%$41.7$41.02%$0.32$0.2910%
Office Depot Inc. ODP, -0.90%$19.0$21.0-10%$0.03$0.0262%
Abercrombie & Fitch Co. Class A ANF, +1.27% -$42.5-$61.7N/A-$0.62-$0.91N/A
Source: FactSet

It’s easy to understand how a long-term trend (the crushing of traditional brick-and-mortar retail by Amazon and its best online competitors) can be temporarily reversed by an earth-shattering tax cut. But keep in mind that the fantastic year-over-year comparisons will not last. We only have two more quarterly earnings seasons that will show the full effect of the tax cuts. The excitement will end.

Meanwhile, earlier this week, MarketWisdom.com co-founder Ivaylo Ivanov called retail “the clear leader right now” in the stock market. You might think that two more quarters of wonderful earnings and sales comparisons make for a long-term investing thesis, but six months is actually a short period for serious long-term investors. Watch the headlines — they turn on a dime and are fashioned as if every investor is a professional day-trader.

More retail coverage:

• Three reasons for Target’s better-than-expected earnings

• Kohl’s earnings and sales beat, guidance raised

• Data Say This New Retail ETF Could Be A Winner

• Earnings Show That As Macy’s And Walmart Go, So Goes Retail

Also see: REIT prices push higher despite the Federal Reserve’s interest-rate increases

Create an email alert for Philip van Doorn’s Deep Dive columns here.

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