US Retailer Rundown: Earnings Reports Show COVID-19 Accelerating Trends

Outside of the hospitality and tourism industry, perhaps no major group of US companies has borne the brunt of the COVID-19 pandemic more than brick-and-mortar retailers.

Stocks (1)

Q1 earnings season is winding down, with over 90% of the companies in the S&P 500 having reported earnings as of last week, but there’s still one key group to watch in this week’s reports: retailers.

Outside of the hospitality and tourism industry, perhaps no major group of US companies has borne the brunt of the COVID-19 pandemic (and the associated economic disruptions) more than brick-and-mortar retailers. While an immediate spike to double-digit unemployment represents a massive headwind for all retailers, the national/international large-capitalization firms that investors will be watching this week are in a far better position to weather the proverbial storm than their small business peers, many of which will never reopen.

This “between a rock and a hard place” narrative has already played out in the earnings reports of some of the high-profile names that have reported earnings already this week:

Walmart (WMT) shares are on the rise in today’s trade after the big-box retailer reported a +10% rise in same store sales and an impressive 74% increase in e-commerce sales. Overall, the company saw $1.18 in adjusted EPS and $134.6B in revenue for the quarter. After hiring an additional 200k employees last quarter, investors believe that Walmart may be poised to benefit regardless of what happens with the virus and economy moving forward.

Home Depot (HD) failed to impress traders with its Q1 results. The home improvement retailer did report a solid 7% increase in revenues, but pandemic-related costs ultimately led to a lower-than-expected $2.08 print in EPS. The company also suspended its full-year outlook, prompting traders to take the stock almost -2% lower this morning.

Kohl’s (KSS) reported an ugly -43.5% drop in net sales through Q1, resulting in a -$3.50 loss per share. The company’s CEO, Michelle Gass, noted “We know this experience will have a lasting impact to customer behavior and the retail landscape,” but cited the company’s strong financial position (including $2.5B in cash and revolving credit) as a bullish sign. The stock is trading up 2% in early trade today.

In a different area of the retail realm, Advance Auto Parts (AAP) missed analysts’ earnings estimates by a country mile, reporting just $0.91 in EPS vs. $1.73 expected, with comparable store sales falling by -9.3%, more than anticipated. Nonetheless, the stock is rallying by 6% as of writing, perhaps on investor hopes of more demand for automobiles over public transportation as economic activity resumes despite the lack of a vaccine for COVID-19.

As the chart below shows, the stocks of these companies run the gamut from testing new record highs (WMT and HD), muddling along at low levels (KSS), and starting to recover back toward pre-crisis levels (AAP):

Source: TradingView, GAIN Capital

Looking ahead, the rest of this week’s key US earnings reports will also be in the retail sector:

  • Home Depot rival Lowe’s Companies (LOW) reports before the bell tomorrow, with analysts expecting $1.30 in EPS
  • Walmart rival Target (TGT) is expected to report $0.73 in EPS at the same time.
  • Speciality retailers Ross Stores (ROST) and TJX Companies (TJX) are on tap for Thursday, with estimates set at a $0.07 gain in EPS and a -$0.16 loss respectively. These firms are more in the mold of Kohl’s, and are likely to see a sharp decline in business due to the massive economic disruption.
  • Finally, Foot Locker (FL) reports Q1 earnings Friday morning, with analysts setting the bar at just $0.11 in EPS this quarter.

For traders, the most actionable takeaway for this week may be to stick with what’s working. In many ways, the COVID-19 pandemic has accelerated existing trends, such as the shift away from physical locations to online shopping and the importance of omnichannel distribution, and even as the US economy gradually “opens up,” it’s hard to imagine the tramautized populace piling into crowded physical locations to browse expensive designer clothes or scout for a third pair of vanity sneakers any time soon.

More from Equities


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.