Retail Earnings Provided Clear Customer Behavior Insights That Benefited Discount Retailers And Left High-End Retailers In The Dark

Like TJX Corporation (NYSE:TJX), Ross Stores Inc (NASDAQ:ROSS) thrived as consumers drifted away from high-end retailers. Ross Stores topped quarterly estimates and improved its outlook, with its shares rising about 6% on Thursday upon Thursday’s report during extended trading. Premium cosmetics giant, The Estee Lauder Companies (NYSE:EL), issued a weak guidance and slow recovery of its business in Asia. Farfetch Limited (NYSE:FTCH) stock tanked after the luxury fashion e-commerce retailer posted a big revenue miss and weaker than expected guidance. These latest reports continue the trend that Target Corporation (NYSE:TGT) and Walmart Inc (NYSE:WMT) portrayed earlier which is that high-end and premium ‘wants’ retailers are on the losing side of this macroeconomic chapter, while necessities and off-price retailers are on the winning one, with customers still being willing to splurge and find bargainsf for discounted premium goods.

Ross Stores jumped nearly 5% a day upon its report. Like TJX who reported steady sales of its discount apparel and accessories and a stronger than expected demand for home decor goods, the discount retailer topped both sales and earnings estimates for its second quarter.  Net sales grew 7.7% to $4.93 billion, topping the expected $4.75 billion with earnings per share amounting to $1.32, surpassing Refinitiv’s consensus estimate of $1.16. While Ross Stores previously expected its 2023 same-store sales be stay relatively flat, it now expects them to expand between 2% and 3%. The off-price retailer also lifted its annual profit per share guidance from the previous range of $4.77 to $4.99 to a newly projected range of $5.15 to $5.26.