Retail Q2 Earnings: Sector Outperforms, Excluding Amazon

Retail sector Q2 earnings show a 12.9% increase in earnings and 6.6% higher revenues, with 75% of companies beating EPS and revenue estimates. Excluding Amazon, the growth pace drops to 1.1% and 4.6%. Small-cap retailers in the S&P 600 index have a 2.5% earnings increase and 1.9% higher revenues, with 70.4% beating EPS and 66.7% beating revenue estimates.

The Retail sector in the S&P 500 index has reported strong Q2 earnings, with a 12.9% increase in earnings and 6.6% higher revenues. According to Zacks Investment Research [1], 75% of the sector’s companies beat EPS estimates, and an equal proportion exceeded revenue estimates. This performance compares favorably to recent periods, particularly on the revenue side. However, when Amazon’s substantial contribution is excluded, the growth pace drops to 1.1% for earnings and 4.6% for revenues, indicating a more moderate growth trend.

Small-cap retailers in the S&P 600 index also demonstrated resilience, with a 2.5% increase in earnings and 1.9% higher revenues. Zacks Investment Research [1] reports that 70.4% of these companies beat EPS estimates, and 66.7% exceeded revenue estimates. This shows that the sector’s growth is not solely driven by large-cap players but also includes strong performance from smaller retailers.

The Retail sector’s Q2 performance highlights the sector’s ability to navigate challenging macroeconomic conditions. While the overall earnings and revenue growth rates are promising, the sector’s performance without Amazon’s significant contribution suggests a more nuanced picture. The inclusion of small-cap retailers in the S&P 600 index further underscores the sector’s diversity and resilience.

References:
[1] https://finviz.com/news/151699/breaking-down-q2-retail-earnings-good-or-bad