Tuesday's Market Minute: Retail Earnings Winners & Losers

With earnings season coming to a close, several retailers are set to report this week to wrap up the quarter. 

PVH Corp. reports Tuesday after the close, with Five Below FIVE, Chewy CHWY, and Victoria’s Secret VSCO releasing Wednesday also after the closing bell. Discounters Ollie’s Bargain Outlet and Dollar General are due Thursday before the open, and Lululemon will report that afternoon. 

Best Buy posted its second quarter results Tuesday morning, with sales and profit both falling as demand for electronics continues to stabilize after experiencing a pandemic-related surge. Major retailers have broadly reported declining sales, with more lackluster guidance into the back half of this year as discretionary spend continues to tighten. Best Buy specifically was dragged lower by falling demand for appliances, home theater, computer, and mobile phones. The company’s CEO Corie Barry said this reflects a consumer electronics industry that remains challenged due to the pull forward of demand in prior years.

Best Buy’s performance through Monday’s close speaks to this tepid environment. Shares have dropped almost 11% this month and almost 8% so far in 2023. Among the retailers that released quarterly updates last week, this puts the stock in the middle of the pack. Clear winners in retail so far include Abercrombie and Fitch, which rallied over 16% last week, fueling its 116% year-to-date surge. Guess was another earnings winner, jumping 13% last week. Some of the laggards last week include Macy’s M, Dick’s Sporting Goods DKS, and Foot Locker FL, which all fell over 20% and are all lower on the year. The consumer discretionary ETF has risen 28% in 2023, but pulled back a modest 5% in the month of August.

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