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Retail Earnings This Week: Big-Box Chains to Make Big Gains, Off-Price Could Fall Victim to COVID-19

It’s a big earnings week for retail.

Four of the country’s largest nationwide chains — big-boxes Walmart and Target, department store Kohl’s and off-pricer TJX — are set to report second-quarter financial results over the course of the next few days. (Alibaba and Foot Locker also report earnings on Thursday and Friday, respectively.)

The numbers come at a precarious time for the retail sector, whose challenges amid shifting consumer habits and the rise of e-commerce have been compounded by the ongoing coronavirus pandemic. Government-imposed lockdowns and COVID-19 fears have already significantly impacted both top and bottom lines in the first quarter, albeit in different ways: For Walmart and Target, panicked shoppers drove a surge in sales of essential goods, while physical-first companies like Kohl’s, TJ Maxx and Marshalls took a huge hit as store traffic dwindled and, in most cases, completely halted for weeks.

As we enter Q2, FN rounds up the performance of these major retailers and provides a preview of what’s to come.

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Walmart

Walmart Inc. has proven to be a silver lining for the hard-hit retail industry. During the three months ended May 1, its profits rose 3.9% to $3.99 billion, or $1.40 per share. On an adjusted basis, earnings per share were $1.18 — exceeding market watchers’ bets by one cent. Revenues also jumped 8.6% to $134.62 billion, versus analysts’ forecasts of $130.31 billion.

According to the Bentonville, Ark.-based company, strength in food, health and wellness products and other general merchandise categories helped lead the chain to a 10% improvement in same-store sales. Its e-commerce business shot up a whopping 74%, with contactless pickup and delivery services helping drive purchases on the retailer’s website and marketplace.

These trends are only expected to continue in the second quarter, with Wall Street anticipating earnings of $1.25 per share and revenues of $135.37 billion.

Kohl’s

Kohl’s Corp.’s balance sheet took a huge hit in the first quarter. For the three-month period ended May 2, the Menomonee Falls, Wis.-based business posted an adjusted loss of $495 million, or a loss of $3.20 a share, compared with last year’s earnings of $98 million, or 61 cents a share. Consensus bets put the loss at $1.75 per share.

While its revenues plummeted more than 40% to $2.43 billion, the department store still trumped market watchers’ expectations of $2.16 billion. Online sales, on the other hand, climbed 24% in the quarter and spiked more than 60% in April — the majority of which consumers spent on lockdown as COVID-19 took hold in the United States.

The second quarter, however, could see some damage from the temporary closures of many stores. (Plus, its reopened stores have been operating at reduced hours.) Analysts are looking for a loss of 83 cents per share and revenues of $3.09 billion.

Target

Like rival Walmart, digital revenues were a big win for Target Corp., which reported first-quarter same-store sales growth up 10.8% — driven by a 141% surge in e-commerce. According to the company, revenues through its online platforms accelerated every month in the quarter, soaring from 33% in February to 282% in April.

The Minneapolis-headquartered retailer also logged an 11.3% gain in revenues to $19.6 billion, slightly above market watchers’ bets of $19 billion. However, profits for the three months ended May 2 fell to $284 million, or 56 cents per share, from the prior year’s $795 million, or $1.53 per share. On adjusted basis, earnings per share were 59 cents, compared with analysts’ expectations of 68 cents a share.

For the second quarter, Wall Street is projecting earnings of $1.62 per share and revenues of $20.05 billion.

TJX

The TJX Companies Inc. is counting on store reopenings to revive its sales. In the three months ended May 2, it posted a loss of $887 million, or 74 cents per share — 59 cents worse than consensus bets of a 15-cents per share loss. Revenues also missed analysts’ expectations, coming in at $4.4 billion versus estimates of $5.17 billion.

Although its online platforms are operational, the TJ Maxx and Marshalls parent shuttered its e-commerce business at some point during the first quarter, while many other retailers conversely shifted resources to digital and attempted to lure more shoppers to their websites. It expected its brick-and-mortar fleet to be “mostly reopened” by the end of June.

Wall Street is forecasting a second-quarter loss of 11 cents per share and revenues of $6.52 billion.

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