1. Win with product
2. Win with consumer engagement
3. Win in the digitally-led marketplace through its DTC digital-first approach
4. Develop a demand and data-driven operating model, connecting the planning, buying and selling of inventory to demand and increasing speed and flexibility
5. Drive efficiencies and invest in initiatives that will fuel growth

1. Win over a new generation of consumers—Via diverse content and market investments, the company continued its momentum in global brand consideration and purchase intent by customers.
2. Energize core products and accelerate under-developed categories—The company expanded high-potential categories to deliver compelling new assortments that resonate with post-pandemic consumer wardrobing. Special releases included Polo Color Shop, its Team USA Olympics line and Lunar New Year gifting collections.
3. Drive targeted expansion in regions and channels—The company delivered growth across every region in the quarter.
4. Lead with digital—Total Ralph Lauren digital ecosystem revenues grew by low-double-digits year over year.

Total sales for Academy Sports and Outdoors declined by 7.1% year over year versus 13.2% growth in the prior quarter, while its comparable sales declined by 7.5% year over year versus 13.1% growth in the previous quarter. 

The company’s online sales grew 18.8% year over year, accounting for 9.5% of its total merchandise sales in the quarter. E-commerce sales have surged 375% since the first quarter of fiscal 2019.

By category, footwear sales declined by 2.0% year over year, outdoor sales declined by 6.0%, apparel sales were down 9.0% and sports and recreation sales fell by 12.0%. Steven Lawrence, Executive Vice President and Chief Merchandising Officer of the company, said, “categories such as fitness, fishing and bikes saw an outsized benefit from the shutdown associated with the COVID pandemic. As we expected, these businesses are not sustaining the same level of demand as they did in 2020 and 2021.” 

The company’s gross margin decreased by 20 basis points (bps) year over year to 35.5% due to increased inventory and e-commerce shipping costs, while adjusted EPS declined by 8.5%. 

The company revised down its sales and comp sales guidance for fiscal 2022 and now expects sales of $6.4–6.6 billion, compared to prior guidance of $6.6–6.8 billion and comp sales of (3.0)%–(6.0)% year over year, compared to its previous guidance of (1.0)%–(3.0)%. The company also revised down its EPS and now expects it to be $6.60–$7.30, down from $6.70–$7.30, a decline of 3.9%–13.2% year over year.

In fiscal 2022, the company aims to open eight new stores as part of its plan to open 80—100 stores between fiscal 2021 and fiscal 2026. 

Gap’s total revenues declined by 13.0% year over year, compared to a 2.0% increase in the prior quarter. Comparable sales were down 14.0% versus a 3.0% increase in the previous quarter, while digital sales were down 17.0% year over year, representing 39% of the total business.

By brand, Athleta’s sales increased by 4.0% year over year, Banana Republic’s sales increased by 24.0%, Gap’s sales decreased by 11.0% and Old Navy’s sales declined by 19%. In terms of comps, Athleta reported a 7.0% decline year over year, Banana Republic reported a 27.0% increase, Gap saw a decline of 11.0% and Old Navy reported a 22.0% decline.

The company’s gross margin stood at 31.5%, down 930 bps year over year due to incremental transitory air freight costs, higher discounting at Old Navy and inflationary commodity price increases; however, the company partially offset these issues with lower discounting at Banana Republic banner.

CEO Sonia Syngal stated, “We expected tough first half compares driven by moderate product delays due to supply chain disruptions last year as well as lapping the brand’s disproportionate benefit from last year’s stimulus. In addition, we also expected continued assortment imbalances given the numerous pivots to fashion, such as dresses, pants and tops, which were underrepresented in Old Navy’s women’s product mix. Old Navy was especially disadvantaged given their leadership in fleece, active and kids and baby, categories that grew significantly during the height of the pandemic and experienced lower-than-expected demand during the first quarter.” 

Gap lowered its financial guidance for fiscal 2022. The company now expects sales to decline low- to mid-single-digit year over year versus its prior guidance of low-single-digit sales growth. The company issued a new adjusted operating margin guidance of 1.5%–2.5%, versus its previous guidance of 6.0%–6.5%, and now forecasts adjusted EPS to be $0.30–$0.60 versus the prior guidance of $1.85–$2.05.

Syngal said, “The majority of the sales and earnings reduction from our prior guidance stems from Old Navy, primarily assortment imbalances and lower-than-anticipated demand in key categories like active, fleece and kids and baby. While the primary impact of soft demand in active, fleece and kids and baby is being felt at Old Navy, our Gap and Athleta brands are not immune to this customer shift.”

For fiscal 2022, Gap reiterated its capital expenditure guidance of about $700 million, primarily to support growth investments, including digital and supply chain capacity projects and store growth for its Athleta and Old Navy banners. In fiscal 2022, Gap plans to open 30–40 stores each for Old Navy and Athleta, and close about 50 Gap and Banana Republic stores in North America. 

Lululemon Athletica’s total revenues increased by 32.0% year over year, accelerating from 23.1% growth in the prior quarter. Its total comparable sales increased by 29.0% year over year versus 22.0% comp growth in the previous quarter.

The company’s DTC sales increased by 33.0% year over year, accounting for 45.0% of the company’s total revenues versus 44.0% in the year-ago quarter.

Management stated that the company saw broad-based growth across its product categories and regions. Its women’s apparel business grew by 24.0% on a three-year CAGR basis, while its men’s apparel business also remained strong, with sales increasing by 30% on a three-year CAGR basis. During the quarter, the company launched Blissfeel—Lululemon Athletica’s first sneakers for women—in select stores in China, the UK and the US. It also plans to launch a men’s version of the Blissfeel shoes in 2023.

By geography, North American revenues increased by 32.0% year over year and international revenues increased by 29.0% year over year.

The company’s gross margin declined by 320 bps to 53.9%, driven by a 370-bps decrease in product margin—which included a 340 bps increase in air freight. Its operating margin decreased by 30 bps to 16.1%, while its diluted EPS increased by 33.3% year over year.

The company opened five net new stores and completed four co-located optimizations. 

For 2Q22, the company expects its revenues to increase by 21%–22% year over year, but its gross margin to be down 200 bps due to increased air freight costs led by port congestion and capacity constraints. The company expects its adjusted EPS to increase by 10.3%–13.3% year over year in the second quarter. At the same time, Lululemon plans to open 20 net new company-operated stores.

For the full-year 2022, Lululemon Athletica expects its revenues to increase by 20.6%–22.4% year over year, based on the assumption that its e-commerce business will grow by a high-teens-to-low-20s percentage. The company forecasts its gross margin will decrease by 100–150 bps year over year due to increased investment in its distribution center network and a strategic rise in content development costs for its home gym technology, MIRROR; this will be slightly offset by a reduction in digital marketing. Lululemon Athletica now expects air freight to have a modest negative impact of nearly 30 bps on its gross margins in 2022 versus its prior expectation of flat change. The company expects its adjusted EPS to increase by 20.0%–22.0% and continues to expect capital expenditures of $600–625 million for fiscal 2022, reflecting increased investment in its digital capabilities, stores and supply chain, along with other corporate infrastructure projects.

For 2022, Lululemon Athletica continues to expect to open nearly 70 net new company-operated stores, with about 40 stores in its international markets—the majority of these 40 store openings are planned for Mainland China. 

Urban Outfitters reported a revenue increase of 13.4% year over year, versus 22.4% growth in the prior quarter. At the same time, comparable sales increased by 11.0% year over year, decelerating from 14.0% in the previous quarter.

By brand, Anthropologie led the way, with comps of 18% year over year—followed by Free People and Urban Outfitters, which posted comp growth of 15.0% and 1.0%, respectively. By segment, retail saw total sales growth of 12.0% year over year, while wholesale’s net sales increased by 6.0%.

The company’s gross margin declined by 168 bps year over year to 30.7% due to supply chain disruptions and continued elevated inbound freight costs.

The company witnessed strong demand across all categories during the first quarter, with women’s apparel and home furniture performing the strongest. Urban Outfitters stated that demand for dresses and occasion wear is growing substantially as weddings and events are once again occurring.

Urban Outfitters did not provide financial guidance, but management anticipates sales growth to decelerate sequentially in the second quarter. CFO Melanie Marein-Efron said, “We believe our Retail segment comp sales growth could land in the low single-digit range and Wholesale segment sales could grow in the mid-single digits. Together, this would result in total company sales growth in the low single-digit range.”

Furthermore, the company forecasts that its gross margins for 2Q22 will be down by about 500 bps year over year due to ongoing supply chain challenges and increased inbound product transportation costs. 

Burlington Stores’ total revenue decreased by 12.0% year over year, versus 14.3% growth in the prior quarter. Adjusted EPS declined by 79.2% year over year, while comp sales declined by 18.0% on a two-year basis.

The company achieved 20.0% comp store sales growth last year and, as a result, it planned for a mid-teens comp decline in its first quarter. However, it missed this plan due to low and unbalanced inventories in February and March. The company deliberately planned inventories down in the first quarter, but this backfired, as late deliveries created significant gaps in its assortment, impacting its sales.

Burlington’s gross margin rate declined by 230 basis points (bps) year over year to 41.0% due to higher freight expenses and low merchandise margins.

The company stated that it feels disappointed with its first-quarter results and that it also expects the economic environment to worsen this year. Should this happen, the company said it would likely face more challenges in the short term. However, it believes that the economic slowdown could provide long-term benefits, as it could cause new shoppers to begin shopping at off-price retailers as they look for value.

CEO Michael O'Sullivan told analysts: 

The low-to-moderate income customer is under a lot of pressure right now. In 2021, certainly, in proportion to their income, these shoppers were big beneficiaries of government support programs, stimulus checks, child benefit, extended unemployment, and those programs have now gone. That alone would have made 2022 a difficult year.

But if you layer on top of that, retail price inflation for essential items like food and gas is now running at extraordinarily high levels. And again, those items represent a disproportionate share of household budgets for those shoppers. So, it's not difficult to see why the customer is under significant economic stress.

At the end of the quarter, merchandise inventories had increased by 64.0%, while in-store inventories increased by 2.0% on a comp store basis. Reserve inventory, which the company holds back in anticipation that it will not be able to be sold, was 50.0% of the total inventory.

Burlington opened 26 net new stores during the quarter, bringing its store count to 866. 

For fiscal 2022, Burlington Stores expects a comp sales decline of 6.0%–9.0% year over year and its adjusted EBIT margin to be down by 130-200 bps. It expects its adjusted EPS to be in the range of $6.00–$7.00, representing a decline of 16.7%–28.6% year over year.

For the second quarter of fiscal 2022 (2Q22), the company expects a comp sales decline of 13.0%–15.0% year over year and its adjusted EBIT margin to be down 610-670 bps. It expects its adjusted EPS in the range of $0.20–$0.30, representing a decline of 84.0%–90.7% year over year. The company remains cautious about second-quarter planning, as it is concerned about the economic environment, primarily the impact of inflation on retail spending. Lower-income customers are under significant financial stress, and it is not clear that this will change in the next few months, the company stated.

Burlington plans to open 120 new stores during 2022 while relocating or closing 30 stores, adding 90 net new stores to its fleet. 

Ross Stores’ total sales declined by 4.1% year over year, versus 18.1% growth in the prior quarter. The company’s comparable store sales declined by 7.0% year over year, and its EPS decreased by 27.6% year over year.

According to the company, the results came in below expectations due to high inflationary pressures and very strong comparatives from last year’s government stimulus quarter. Management also reported that it saw customers pull back on spending at both its Ross and dd’s DISCOUNTS stores.

The company’s operating margin was down 340 bps year over year to 10.8% due to same-store sales decline and cost pressures from higher freight and wages. Men’s clothing was its best-performing category this quarter, while Florida was the top-performing region in terms of sales.

Michael Hartshorn, Group President, COO told analysts: 

Obviously, with higher fuel and food prices, discretionary spending for the lower-end customer is being squeezed. We saw customers at both chains [Ross and dd’s DISCOUNTS] pull back on spending in the first quarter. …Food and fuel prices with inflation there means they have less to spend on discretionary items.

At the quarter’s end, Ross’s inventories were up 57.0% year over year, mainly due to higher packaway inventory (which includes apparel), which represented 43.0% of total inventories versus 34.0% in the first quarter of 2021 (1Q21), when the company used a substantial amount of packaway inventory to meet robust consumer demand.

The company opened 22 new Ross stores and eight dd’s DISCOUNT stores during the quarter. 

Ross Stores updated its guidance with a more conservative outlook for the rest of the year, given its first-quarter results and the uncertain macro-economic and geopolitical environment.

For fiscal 2022, the company revised down its comp sales and EPS guidance. It now expects its comp sales to decline by 2.0%–4.0% year over year, compared to its prior guidance of flat to 3.0% growth. Meanwhile, it expects its EPS in the range of $4.34–$4.58, compared to its prior guidance of $4.71–$5.12, representing a decline of 5.6%–10.9% year over year.

For 2Q22, Ross forecasts total sales to decline by 1.0%–4.0% year over year and comp sales to decline by 4.0%–6.0%. It expects its operating margin to be 10.4%–10.8%, down from 2021 due to deleveraging on lower comp sales and ongoing expense headwinds that are expected to continue through the first half of fiscal 2022. Ross expects its EPS in the range of $0.90–$1.10, representing a decline of 23.0%–28.8% year over year.

Ross plans to return to its regular store opening plan of 100 new store openings in 2022, comprising 75 Ross and 25 dd’s DISCOUNTS locations. It plans to open 29 stores in the second quarter, including 21 Ross and eight dd’s DISCOUNTS stores. 

TJX Companies’ total sales increased by 13.1% year over year, versus 28.6% growth in the prior quarter. The company’s EPS increased by 11.4% year over year, while its overall open-only comp sales were flat year over year.

The operating margin was up 30 bps year over year to 7.5%, driven by a reduction in Covid-19 related expenses and the annualization of temporary store closures internationally last year.

By banner, Marmaxx (US Marshalls and US T.J. Maxx) comps increased by 3.0% year over year, driven by Marmaxx’s overall apparel business, which was up 6.0%. HomeGoods comps declined by 7.0% versus a 40.0% open-only comp increase in the 1Q22. TJX Canada’s sales increased by 41.0% year over year, and TJX International sales increased by 163.0% due to stores being open during the quarter, compared to 1Q22 when many stores closed due to Covid-19 restrictions.

Total inventories were up 37.0% year over year, and TJX management stated that the overall availability of branded merchandise remains strong.

During the quarter, the company increased its store count by 26 for a total of 4,715 stores.

For 2Q23, it expects US comp store sales to be down 1.0%–3.0% versus a 21.0% US open-only comp store sales increase in 2Q22. The company expects second-quarter sales in the range of $12.0–12.2 billion, representing growth of flat to 1.2% year over year. It expects EPS of $0.65–$0.69, representing growth of 1.2%–7.8% year over year.

For fiscal 2023, TJX revised down its sales and US comp guidance and now expects US comp store sales to be up 1.0%–2.0% year over year, compared to the prior guidance of 3.0%–4.0% growth. The company expects total sales in the range of $51.3–51.8 billion, compared to the previous guidance of $52.6–53.1 billion, representing growth of 5.8%–6.8% year over year. TJX management stated that store visits have become very appealing to many customers, which will positively affect the company’s sales growth. The lower sales guidance is primarily a result of a change in foreign exchange rates, which reduced its full-year sales forecast by around $700 million.

The company expects adjusted EPS of $3.10–$3.20, representing growth of 10.0%–12.0% year over year. 

We ended the first quarter with FOCUS availability in over 700 stores. We plan to fully roll out BOPIS availability during the course of the year with the goal to be in approximately 75.0% of our store fleet by fall. We are excited about the role of BOPIS as it drives customer engagement and traffic to our stores.

Coty reported a 15.4% year-over-year sales increase versus 12.0% growth in the prior quarter, while comparable-store sales increased by 13.0% year over year. Adjusted EPS increased by 200.0% year over year.

Adjusted gross margin increased by 240 bps year over year to 64.6%, driven by a favorable product and category mix and pricing.

By segment, prestige reported 21.0% year-over-year sales growth, driven by strength across all regions, including continued recovery in most EMEA markets, travel retail and the US. Prestige fragrance sales continued to grow at a double-digit pace in the third quarter, with nearly all brands—particularly Burberry, Chloe, Gucci and Hugo Boss—showing strong sales results. Prestige cosmetics sales nearly doubled during the quarter, driven by strong performances of Gucci Makeup, Kylie Cosmetics and Burberry Makeup. The consumer beauty segment saw 8.0% year-over-year sales growth, with strong performance across color cosmetics, mass fragrances and body care.

By geography, the company saw sales growth across all regions and travel retail. The Americas’ sales grew 17.0% year over year, driven by strong growth in the prestige and consumer beauty segments. EMEA sales increased by 16.0% year over year, driven by a double-digit sales increase in the prestige and consumer beauty segments after Covid-19-related restrictions from the prior year were relaxed. APAC sales increased by 9.0% year over year, surpassing pre-Covid-19 levels, fueled by substantial expansion in regional travel retail.

The company also released a new virtual try-on tool for its Sally Hansen nail polish line, allowing customers to easily experiment with a wide shade variety before purchasing, without making a mess. This creates an entirely new shopping experience, whether buying online or in-person, that makes testing nail polish accessible, hygienic and easy.

For fiscal 2022, Coty reiterated its comparable sales guidance, expecting growth at the upper end of the previously guided range of low-to-mid-teens percentage growth year over year. Based on current foreign exchange rates, Coty expects a 4.0%–5.0% headwind to its reported sales in the fourth quarter of 2022.

Coty raised fiscal 2022 adjusted EPS guidance and now expects it between $0.23 and $0.27, up from the previously guided range of $0.22–$0.26.

The company continues to expect adjusted EBITDA of $900 million for fiscal 2022 as it navigates the inflationary environment while intentionally reinvesting gross margin gains and cost savings in its brands to maximize value. 

Estée Lauder reported a 10.0% year-over-year increase in sales versus 14.2% growth in the prior quarter. Meanwhile, organic sales increased by 9.0% year over year and adjusted EPS increased by 17.0% year over year.

The company’s operating income increased by 15.0% year over year, and its operating margin expanded by 110 bps to 21.6%, reflecting higher net sales and a favorable impact from a stronger US dollar. 

By geography, organic net sales in the Americas increased by 11.0% year over year, with all markets and product categories contributing to growth. In Europe, the Middle East and Africa (EMEA), organic net sales increased by 18.0% as growth was realized across most markets, channels and brands. Organic net sales declined by 4.0% in the Asia-Pacific region due to Covid-19 lockdowns in Mainland China. 

By category, fragrance’s organic net sales grew 31.0% year over year, with sales growth in every region and across all brands. Hair care’s organic net sales increased by 17.0%, reflecting increases from both Aveda and Bumble and bumble as brick-and-mortar salons and retail stores recover. Makeup’s organic net sales increased by 12.0%, reflecting continued progression toward recovery in western markets and increased usage occasions. Skincare organic net sales increased by only 3.0% year over year due to sales decline in the Asia-Pacific region, which was affected by transitory logistics constraints in China. 

The CEO, Fabrizio Freda, said:

Estée Lauder brand entered the metaverse as connecting with our consumer wherever they are is paramount, and we are excited to be testing and learning in this new ecosystem. Estée Lauder was the exclusive beauty brand partner of Decentraland Metaverse Fashion Week, the first ever large virtual fashion week in an unchanged metaverse. 

Due to Covid-19 restrictions in Mainland China and the impact of the Russia-Ukraine war, Estée Lauder revised its fiscal 2022 revenue growth guidance and now expects high-single-digit growth year over year, compared to its prior guidance of double-digit growth. The company expects adjusted EPS growth to be 8.0%–10.0% on a constant currency basis. 

According to the company, eliminating sales in Russia and Ukraine has reduced expected fourth-quarter sales growth by 120 bps. 

L’Oréal reported a 19.0% year-over-year increase in revenues versus 15.4% growth in the prior quarter. Comp sales increased by 13.5% year over year. All divisions grew at a double-digit pace year over year: the professional products division recorded 22.7% year-over-year sales growth; consumer products sales increased by 11.1%; L’Oréal Luxe’s sales were up 25.1%; and active cosmetics sales grew by 22.4%.

By channel, there was a clear revival in offline sales, which showed a comp sales growth of 15.0%. Meanwhile, e-commerce sales grew by 8.0% and represented 25.8% of quarterly sales. Travel retail sales increased by 19.0%, boosted by a sharp sales rebound in Europe and continued double-digit sales growth in Asia.

By geography, Latin America achieved the fastest sales growth at 33.9% year over year, North America’s sales increased by 21.5% and Europe’s sales increased by 15.8% year over year. North Asia reported 18.0% year-over-year sales growth, led by double-digit sales growth in Mainland China. Sales in the South Asia Pacific, the Middle East, North Africa and Sub-Saharan Africa region were up 18.7%, with strong performances in India and the Gulf countries.

At 40.0%, L’Oréal’s fragrance business doubled global fragrance growth (20.0%), as the company is benefitting from the beauty products premiumization trend. Cosmetics are rebounding in Europe and the US—where mass and luxe provide the strongest benefits.

The company did not provide the financial guidance for fiscal 2022; however, it remains optimistic about the beauty market’s outlook in the coming months.

Ulta Beauty’s total revenues increased by 21.0% year over year versus 24.1% in the prior quarter, while its comp sales increased by 18.0% year over year and its EPS increased by 53.7% year over year. The sales growth was driven by the favorable impact of fewer Covid-19 restrictions compared to 1Q21.

The company’s gross margin increased by 120 bps year over year to 40.1%, driven by leveraging fixed costs and favorable channel mix shifts, but partially offset by lower merchandise margin.

By category, bath and fragrance, haircare, makeup and skincare all delivered double-digit comp growth year over year. Sales of makeup exceeded pre-pandemic levels in both mass and prestige cosmetics. Compared to 1Q21, prestige cosmetics outperformed mass cosmetics, driven by new and expanding brands and the strong 21 Days of Beauty event.

According to the company, store traffic trends were strong in the quarter as guests capitalized on their preference for in-store shopping, with store capacity returning to normal levels. In April 2022, as guests started returning to stores, the company relaunched makeup services in all stores, just in time to support special events such as proms, graduations and weddings.

The company also expanded and enhanced its digital experiences by launching two virtual try-on tools, each powered by technology developed by companies Ulta Beauty invested in via its digital innovation fund. First, it launched GLAMlab Skin Advisor 2.0, powered by global artificial intelligence startup pot.ai., a skin analysis technology that provides guests with a more accurate skin diagnosis. Secondly, it launched GLAMlab Hairstyle Try-On powered by Restyle, a beauty tech startup that uses artificial intelligence and machine learning to enable virtual try-on of more than 50 different hairstyles.

The company continued to enhance and expand its partnership with Target, opening 26 Ulta Beauty locations in Target shops, ending the quarter with 127 locations. The company opened 10 and relocated six standalone stores during the quarter. 

For fiscal 2022, Ulta Beauty raised its sales, comp sales, operating margin and EPS guidance. It now expects sales of $9.4–9.6 billion, compared to its prior guidance of $9.1–9.2 billion, representing growth of 9.3%– 11.6% year over year. It expects year-over-year comp sales growth of 6.0%–8.0%, compared to its previous guidance of 3.0%–4.0%, and an operating margin of 14.1%–14.4%, compared to its prior guidance of 13.7%–14.0%. The company expects EPS of $19.20–$20.10, compared to the previous guidance of $18.20–$18.70, representing 6.8%-11.8% year-over-year growth.

This updated outlook reflects year-to-date trends while considering uncertainties that could impact the second half of the year, including inflation and the impact of increased points of distribution for prestige beauty. Ulta Beauty expects a stronger first half and weaker second half, when comps growth is projected to be at a low-single-digit rate.

In fiscal 2022, Ulta Beauty plans to open 50 new stores and remodel or relocate 35. 

The Clorox Company reported a net sales increase of 2.0% year over year versus a sales decline of 8.0% in the previous quarter. Net sales growth reflects higher shipments across all reportable segments. Adjusted EPS declined by 19.0% year over year due to lower gross margin, partially offset by lower advertising spending and higher net sales. 

Gross margin decreased by 760 bps to 35.9% due to higher manufacturing and logistics costs and commodity costs. 

The company’s CEO, Linda Rendle, said, “We saw continued strong demand for our products this quarter and delivered sequential gross margin improvement against the backdrop of a volatile and challenging environment. While cost inflation continues to increase and uncertainty remains, we’re seeing the strength and resiliency of our brands driving benefits across the business.” 

By segment, health and wellness’s net sales decreased by 3.0%, with three percentage points of benefit from pricing offset by three percentage points of unfavorable mix and another three percentage points of higher trade spending. Household net sales increased by 6.0%, driven primarily by four percentage points from pricing benefits and a two-percentage-point increase in volume. Lifestyle net sales increased by 4.0%, driven by six percentage points of volume growth, which was partially offset by two percentage points of unfavorable price mix. International sales increased by 1.0%, driven by four percentage points of price mix and two percentage points of higher volume.

For fiscal 2022, Clorox reiterated its sales guidance and revised its EPS guidance. It expects 1.0%–4.0% year-over-year sales decline due to the rising cost inflation and it now expects adjusted EPS in the range of $4.10–$4.30, compared to prior guidance of $4.30–$4.50, representing 41.0%–44.0% year over year decline. The company expects its gross margin to decline by 800 bps, primarily due to higherthan-anticipated commodity, manufacturing and logistics costs. 

In the fourth quarter, Colgate-Palmolive reported organic sales growth of 4.0% year over year, versus 3.0% growth in the previous quarter, driven by higher pricing in nearly every region. Diluted EPS declined by 18.0% year over year.

The company’s gross profit margin was down 220 bps year over year to 58.5% due to significant increases in raw material and logistics costs worldwide. 

By geography, North America’s organic sales were flat year over year as declines in-home care’s organic sales partially offset oral care and personal care organic sales. Specifically, Latin America’s organic sales increased by 6.5%, with Mexico, Argentina, Colombia and Brazil leading growth. Europe’s organic net sales declined by 3.0%, as organic sales declined in the Filorga duty-free business, France and Spain, despite being partially offset by organic sales growth in Germany. The Asia-Pacific region’s organic net sales grew 1.0%, where organic sales growth in Australia, the Philippines and Indonesia was partially offset by organic sales declines in China and Thailand. 

CEO Noel Wallace said:

Our entire cost factor has risen over the past few months, but the biggest impact has come in the area that we call fats and oils. That's palm oil, palm kernel oil, soybean oil, tallow and others. These ingredients are used in every category we compete in, and we expect a more than 60% increase across fats and oils this year. 

Herbalife’s total sales decreased by 11.0% year over year, compared to a 6.6% decline in the previous quarter. The sales decline was due to the inflationary environment, widespread geopolitical uncertainty driven by the Russia-Ukraine war and the current Covid-19 crisis in the Asia-Pacific region and South and Central America. Adjusted EPS declined by 30.3% year over year. 

The gross margin was down 201 bps year over year to 77.0% due to increased supply chain costs and lower production volume at the company’s facilities. 

By geography, North America’s sales decreased by 9.5% year over year, EMEA’s sales decreased by 16.7% year over year, and South and Central America’s sales decreased by 13.6% year over year. Meanwhile, however, Asia Pacific’s sales increased by 1.1% year over year, led by continued strength in India. 

The company is taking meaningful steps to improve margins through pricing actions and cost controls. The company implemented price increases in most markets in the first quarter and will take incremental pricing actions during the second quarter in response to the dramatic increase in input and freight costs.

For the second quarter of 2022, Herbalife expects sales growth to decline by 11.5%–17.5% year over year, including an approximately 270 bps currency headwind versus the prior year. It expects adjusted EPS to be in the range of $0.60–$0.80, representing a decline of 47.4%–60.5% year over year. 

For fiscal 2022, the company revised its net sales and EPS guidance and now expects sales to be in the range of (4.0)%–(10.0)% year over year, compared to prior guidance of flat-to-6.0% growth. However, the company expects net sales will be flat in the second half of 2022 and will return to year-over-year net sales growth in the fourth quarter. Herbalife expects adjusted EPS in the range of $3.50–$4.00, compared to prior guidance of $4.30–$4.80, representing a decline of 16.5%–26.9% year over year. 

For fiscal 2022, the company expects to spend $175.0–225.0 million in capital expenditure. 

The Kimberly-Clark Corporation’s total revenues increased by 7.0% year over year, versus 2.7% growth in the prior quarter. Comparable sales increased by 10.0% year over year, driven by an increase in net-selling price. Adjusted EPS decreased by 25.0% year over year.

The company’s adjusted operating profit declined by 21.8% year over year. The company stated that the results were impacted by $470 million worth of higher input costs—most notably pulp and polymer-based materials, distribution and energy cost increases.

By region, North America’s comp sales increased by 13.0% year over year in the consumer products segment and 5.0% year over year in the K-C professional segment. Outside North America, comp sales increased by 10.0% in developing and emerging (D&E) markets and 8.0% in developed markets.

By segment, personal care sales increased by 11.0% year over year. Consumer tissue and K-C professional sales both increased by 4.0% year over year.

During the quarter, building on its portfolio of period and light bladder leakage solutions, the company acquired a majority stake in Thinx Inc., a company that produces reusable period and incontinence underwear, for total consideration of $181 million. 

Kimberly-Clark raised its sales and comp guidance for full-year 2022 and now expects net sales to grow by 2.0%–4.0%, compared to its prior guidance of 1.0%–2.0%, year over year. Meanwhile, it expects comp growth to be 4.0%–6.0%, compared to its previous guidance of 3.0%–4.0%, year over year. The company expects adjusted operating profits to be down low-to-mid-single-digit year over year and EPS to be in the range of $5.60–$6.00, representing 4.1%–11.5% growth year over year.

Kimberly-Clark expects costs to remain elevated or increase for most inputs, including polymer-based materials and pulp, distribution and energy, for full-year 2022. 

Procter & Gamble’s total revenues increased by 7.0% year over year, versus 6.0% growth in the prior quarter. Comparable sales increased by 10.0% year over year, driven by increased pricing and shipment volumes and a positive product mix. Adjusted EPS increased by 6.0% year over year.

The company’s gross margin was down 400 bps year over year due to high commodity and freight costs, while its operating margin went down 10 bps year over year.

By segment, beauty comp sales increased by 3.0% year over year. Within the beauty segment, skincare, personal care and haircare comp sales increased by low-single-digits year over year. Grooming comp sales increased by 8.0% year over year. Within grooming, shave care comp sales saw a double-digit increase year over year, whereas appliances comp sales declined by a low-single-digit. Health care’s comp sales increased by 16.0% year over year. Within health care, oral care comp sales increased by a high-single-digit year over year; meanwhile, personal health comp sales increased by over 30.0% year over year due to an increase in respiratory products sales from a more intense flu season and innovation in sleep and digestive wellness products. Fabric and home care comp sales increased by 10.0% year over year, in which fabric care comps saw a double-digit increase due to premiumization, innovation and increased pricing. Meanwhile, home care comp sales registered mid-single-digit growth. Baby, feminine and family care comp sales increased by 10.0% year over year; specifically, baby care and feminine care comp sales both saw a double-digit increase year over year, while family care comp sales increased by mid-single-digit.

By region, US comp sales increased by 11.0% year over year, Europe comp sales increased by 10.0% year over year, Asia Pacific (excluding mainland China) comp sales increased by 8.0% year over year and mainland China comp sales were down mid-single-digit year over year.

CFO Andre Schulten stated:

The strategic choices we've made are the foundation for balanced top and bottom line growth and value creation; a portfolio of daily use products, many providing cleaning, health and hygiene benefits in categories where performance plays a significant role in brand choice. In these performance-driven categories, we've raised the bar on all aspects of superiority: product, package, brand communication, retail execution and value. 

The company raised its sales and comps guidance for fiscal 2022 and now expects sales growth in the 4.0%–5.0% range year over year, up from 3.0%–4.0% in its prior guidance. It now expects comp growth of 6.0%–7.0% year over year, up from its previous guidance of 4.0%–5.0%. The company also reiterated its guidance of adjusted EPS growth of 3.0%–6.0% year over year. The company estimates it capital spending to be 4.0%–5.0% of fiscal 2022 net sales.

As a result of increased cost headwinds, Procter & Gamble has announced additional price increases in the feminine and oral care categories in the US, which will be effective in mid-July 2022, and the home care category, which will be effective at the end of June 2022. 

Total revenue at Kohl’s declined by 5.2% year over year—versus 5.8% growth in the prior quarter—while adjusted EPS decreased by 90.0% year over year. The company’s gross margin was down 69 bps year over year to 38.3% due to increased freight costs.

Sales were below the company’s expectations due to inflationary pressures, seasonal weather impact and downward pressure from the home and kids segments, which were both down by double digits in percentage terms compared to 1Q21. Management reported its units per transaction came under more pressure this quarter.

CEO Michelle Gass told analysts:

We're still keeping our customers, but we're actually seeing the average spend go down a little bit. Or another way to look at it is our units per transaction have come under a bit more pressure this quarter, which also says to us that customers, their wallets are being squeezed. And so, they're coming into the store, and they're being a bit more mindful of the brands they're buying and what's all going in their basket.

Digital sales slightly outperformed store sales and represented 30.0% of net sales. While digital sales declined by 1% year over year, they increased by 21.0% on a two-year basis.

By category, men’s apparel sales increased by 3.0% year over year, driven in part by the successful introduction of several new brands to Kohl’s over the past six months, including Calvin Klein, Hurley and Tommy Hilfiger. Outdoor apparel also performed well, while women’s apparel sales grew strongly, with growth in outerwear, denim, inclusive sizing and dresses, including Draper James. Activewear sales performed in line with the company’s sales. The shop-in-shop concept, Sephora at Kohl’s, drove positive beauty sales during the quarter. The company witnessed low-single-digit year-over-year comp store sales growth at 200 Sephora shop-in-shops.

Last year, Kohl’s inventory increased by 40.0% due to a beauty inventory investment to support Sephora and higher in-transit, pack-and-hold inventory. 

Macy’s reported total sales growth of 13.6% year over year, versus 27.8% growth in the prior quarter. Comparable sales increased by 12.8% year over year, while adjusted EPS increased by 176.9% year over year.

The company’s gross margin for the quarter was up 100 bps year over year to 39.6% due to higher average unit retail because of lower promotions on regular price merchandise, ticket price increases and category mix.

Macy’s digital sales increased by 2.0% year over year. However, digital penetration was 33% of net sales, a four-percentage point decline from 1Q21.

By banner, comp sales at Macy’s were up 10.7% year over year. Consumer shopping behaviors shifted during the quarter to more occasion-based apparel. As a result, dresses, women’s shoes, accessories and men’s tailored categories had strong sales performance. Bloomingdale’s comp sales increased by 28.1% year over year, driven by strong sales of dresses, men’s tailored and men’s and women’s contemporary apparel and luggage, with a particularly strong performance in the luxury clothing category. Bluemercury comp sales were up 25.2% year over year due to increased store traffic, better-than-expected private brand growth and increased demand for colorful lip, face and eye cosmetics.

The company’s inventory was up 17.0% year over year. According to management, inventory performance was impacted by a decrease in demand for the active, casual, and soft home categories, increased demand for occasion-based apparel, and loosening supply chain constraints, which resulted in a higher percentage of inventory receipts than expected. 

For full fiscal 2022, the company reaffirmed its sales guidance but raised its adjusted EPS guidance. It expects sales growth to be flat to 1.0% year over year and digital sales penetration to be 35.0%, in line with 2021, down from the prior estimate of 37.0%. The company expects adjusted EPS in the range of $4.50–$4.90, compared to the previous guidance of $4.10–$4.50, representing a decline of 7.5%–15.1% year over year.

For 2Q22, the company expects its net sales to be between $5.5 and $5.6 billion, representing flat growth year over year, and adjusted EPS to be in the range of $0.80–$0.90, representing a decline of 30.2%–34.9% year over year.

Nordstrom reported its total revenue increased by 18.7% year over year, versus 23.4% in the prior quarter. Gross merchandise value (GMV) increased by 19.6% year over year, and EPS increased by 112.4%.

The company’s gross margin increased by 190 bps year over year to 32.8%, driven by improved merchandise margins from favorable pricing impacts and lower markdown rates.

By banner, Nordstrom’s net sales increased by 23.5% year over year, and Nordstrom Rack’s net sales increased by 10.3%. Geographically, its Nordstrom banner in the Southern US—where 44.0% of the company’s stores are located—outperformed the Northern US market by three percentage points.

Digital sales for the quarter were flat compared to the same period in fiscal 2021, as customers increasingly chose to shop in-store. Digital sales represented 39.0% of total sales.

Sales in core categories, including men’s and women’s apparel and shoes, had the strongest growth year over year, as customers refreshed their wardrobes for social events, travel and office returns. Improvements were broad-based across regions, with urban stores experiencing the strongest growth as customer traffic returned in city centers. Men’s and women’s apparel had double-digit year-over-year growth, driven by suiting and dresses, with sales that exceeded pre-pandemic levels. Shoes had strong double-digit growth with increased demand across athletic, casual and formal styles.

Management reported it had not seen an adverse impact on customer spending from inflationary pressures, which it suspects is due to the higher-income profile of its customer base. The company also increased average retail prices without negatively impacting transaction volumes. At the same time, it continues to consider macroeconomic headwinds, including the potential of more pronounced inflation impacts and supply chain disruption, both to its customer and margins. 

For fiscal 2022, the company raised its sales and EPS guidance and now expects its sales to grow 6.0%–8.0% year over year, compared to the prior guidance of 5.0%–7.0% growth. It expects a diluted EPS of $3.20–$3.50, compared to the previous guidance of $3.15–$3.50, representing year-over-year growth of 190.0%–218.2%.

Nordstrom cited continued macro-related cost pressure in labor and fulfillment, which it factored into the revised guidance. The company expects these factors to affect its margins in the coming quarters.

Nordstrom is launching Allbirds, a sustainable shoe brand, in selected stores beginning on June 1, with plans to launch on Nordstrom.com later this summer. 

Alibaba’s total sales increased by 9.0% year over year, versus 10.0% growth in the prior quarter. The sales growth was driven by its local consumer services and its Chinese commerce and cloud segments. Its adjusted EPS declined by 23.0% year over year.

The number of annual active consumers (AACs) in the company’s ecosystem reached around 1.3 billion globally, a quarterly increase of 28 million. AACs grew to 24.6 million in China during the quarter, while AACs outside of China grew to 305 million, with a quarterly net increase of 3.7 million.

Sales from its China commerce segment—which includes retail businesses such as Alibaba Health, Freshippo, Sun Art, Taobao, Taobao Deals, Taocaicai, Tmall, Tmall Global and Tmall Supermarket, alongside wholesale business, including 1688.com—increased by 8.0% year over year. The consumer growth for the segment reflected the successful execution of the company’s multi-app strategy to create personalized, immersive and engaging experiences for different consumption scenarios and formats, which helped attract and retain users of different demographics and shopping behaviors to its commerce ecosystem. Physical goods GMV for Taobao and Tmall grew by a low-single-digit percentage year over year due to demand softening—a result of the impact of Covid-19 induced lockdowns in China—and supply chain disruptions.

International commerce sales increased by 7.0% year over year, driven by solid transaction growth from its Lazada and Trendyol brands. However, this was partially offset by AliExpress’ order decline due to the change in the European Union’s value-added tax rules and supply chain disruptions from the Russia-Ukraine war. Transaction value growth of Alibaba.com businesses slowed to 22.0% year over year due to slowing export growth in China and logistical hurdles.

The local consumer services segment generated year-over-year order volume growth of 9.0%. The slower growth for the quarter was because of the impact of Covid-19 lockdowns in China, which began in March 2022. Sales from smart logistics network Cainiao increased by 16.0% year over year, primarily driven by the growth of fulfillment solutions and value-added services provided to China commerce retail businesses. Cloud business sales increased by 12.0% year over year. The growth of the cloud segment was slower compared to prior quarters, reflecting slowing economic activities, softening demand from customers in China’s Internet industry and delays in the delivery of hybrid cloud projects.

Management stated that while the company’s user traffic and engagement have remained resilient, consumption patterns across categories on its platforms have shifted due to Covid-19-induced lockdowns in China. Fashions and electronics consumption decreased, while demand for essential supplies such as food and fast-moving consumer goods increased significantly. Demand for emerging categories such as health care, activewear and outdoor products also grew rapidly.

Amazon reported 7.0% year-over-year revenue growth, compared to 9.4% growth in the prior quarter. The company reported EPS of $(7.56) for the 1Q22, compared to $15.79 in the same quarter of the last year. Operating income decreased by 58.4% year over year to $3.8 billion.

In Amazon’s retail segments, first-party online sales declined by 3.0% year over year, physical store sales increased by 17.0% and third-party seller services sales increased by 7.0%. At constant currency, first-party online sales turned negative, with growth of (1)%; last quarter, Amazon eked out 1% constant-currency growth in this segment. Amazon Web Services (AWS) sales grew by 37.0%, while advertising sales increased by 23.0% to $7.9 billion.

In the quarter, the company introduced its automated “Just Walk Out” technology—which enables shoppers to enter a store, take what they want and leave without checking out—at two Whole Foods Market stores in Washington, D.C., and Sherman Oaks, California. Just Walk Out technology also rolled out new third-party locations inside LaGuardia Airport and UBS Arena in New York City, and Minute Maid Park in Houston, Texas.

During the quarter, Amazon opened eight new Amazon Fresh grocery stores, bringing the total number worldwide to 46. The newest Amazon Fresh store in Seattle is the world’s first grocery store seeking the zero-carbon certification from the International Future Living Institute. 

The guidance includes an expectation that the company will incur approximately $4.0 billion of incremental costs due to inflation, labor shortage and supply chain constraints in the second quarter. 

JD.com’s total revenues increased by 18.0% year over year, versus 23.0% growth in the prior quarter. Its adjusted EPS increased by 2.4% year over year, net product revenues increased by 16.6% year over year and net service revenues increased by 26.3% year over year.

The company’s core business segment, JD Retail, delivered solid top-line growth and healthy margin improvement, with revenues increasing 17.0% year over year.

By category, general merchandise revenues grew 21.0% year over year, outperforming the electronics and home appliance category, which grew 14.0% year over year. Management said its supermarket category saw strong demand, with its order volume outgrowing JD Retail in the first quarter.

In the first quarter, JD.com established partnerships with a series of high-end brands, French luxury brand Lanvin, French premium cookware brand Le Creuset, accessories and lifestyle brand MCM, German luxury fashion e-commerce platform Mytheresa, Kering Group’s jewelry brand Qeelin and American lifestyle brand Tory Burch. The company also added multiple beauty brands to the platform, such as L’Oreal’s Shu Uemura and Yves Saint Laurent Beauté, men’s skincare brand LAB SERIES and Estee Lauder’s Re-Nutriv collection. Additionally, various apparel brands, including Abercrombie & Fitch, Champion and Ochirly, also opened stores on JD.com during the quarter.

The company’s marketplace and marketing revenues increased by 25.0% year over year. Logistics and other services revenues increased by 28.0% year over year as JD Logistics (JDL) continued to gain traction from external customers due to its uninterrupted supply chain services during the Chinese New Year.

As of March 31, 2022, the number of annual active user accounts stood at 580 million, increasing by 16.2% year over year. 

JD.com did not provide financial guidance; however, the company stated it expects a challenging external environment in the near-term, but remains optimistic and will continue to execute its business strategies and deliver sustainable high-quality growth in the years ahead. 

Qurate’s sales declined by 14.0% year over year, versus a 9.0% decline in the prior quarter. Adjusted EPS declined by 68.8% year over year.

By banner, QxH’s sales declined by 13.0% year over year due to a 12.0% decrease in units shipped, reflecting supply chain constraints, product scarcity for home and electronics items, and weakened consumer sentiment due to inflation. QVC International’s sales declined by 13.0% due to a 6.0% decline in units shipped, supply chain constraints, product scarcity and weakened consumer sentiment driven by the Russian-Ukraine war, which particularly affected QVC International’s European markets. Zulily’s sales declined by 38.0%, reflecting supply-chain-drive product scarcity and marketing inefficiencies. Cost inflation and privacy changes on certain social media platforms caused Zulily to reduce its marketing spend, affecting customer acquisition and retention. Meanwhile, Cornerstone’s sales increased by 19.0%, driven by strong growth in its home brands (Ballard Design, Frontgate and Grandin Road) and increased demand for apparel and home products from Garnet Hill, Cornerstone’s clothing and home furnishings brand.

During the quarter, the company experienced a “favorable category mix shift into apparel” and a reduction in electronics and home segments. Apparel’s revenue increased by 2.0% year over year, driven by the beauty segment’s sales declined by 9.0% year over year due to weakness in the bath and body, and skin. Accessories’ sales fell by 15.0% due to lower demand for leather handbags and casual and athletic footwear. The home segment’s sales declined by 16.0% as the demand was lower in the floor care, fitness, wellness, kitchen electrics and cookware categories. Electronics sales declined by 27.0%, with the computers, home office, smart home and tablets categories facing demand challenges.

CEO David Rawlinson stated, “Our first quarter results reflect the continued challenges of operating amidst extreme supply chain disruptions. In addition, heightened inflationary pressure and the situation in Ukraine led to depressed consumer sentiment and we experienced a larger-than-expected operational disruption related to the December fire at our Rocky Mount, NC fulfillment center. While our turnaround will take time and progress may not be a straight line, we are starting from a position of strength with scale in our television and streaming reach, a strong financial profile and core competencies in building consumer engagement.” 

Details 

Best Buy reported its total sales decreased by 8.5% year over year versus a 3.4% decline in the prior quarter, while its EPS decreased by 29.6% year over year.

Domestic sales decreased by 8.7% year over year due to declining comp sales across almost all categories, with the largest drivers being computing and home theatre. The domestic gross margin was 21.9%, a slight decrease from 23.3% in the same period last year.

Meanwhile, international sales declined by 5.4% year over year due to the closure of its Mexico business and Canada’s comp decline of 1.4%. The international gross margin was 24.3%, increasing from 23.7% same period last year.

Comparable sales decreased by 8.0% year over year, compared to 37.2% growth in 1Q22. Domestic comparable sales declined by 8.5%, and international comparable sales declined by 1.4%.

Management stated that the company saw cost inflation in significant areas, including labor, marketing and supply chain in the 1Q23. However, this cost inflation was largely in line with its expectations, and the company benefited from its planning and execution over the past two years.

The company also noted that while customers have returned to physical stores to see and touch products and get advice, the company’s digital engagement remains high. Online sales made up 31% of domestic sales, compared to 33.0% in 1Q21.

During the quarter, the company expanded its recycling program to include a new service for customers looking for help recycling large electronics. For a fee, the company will go to customers’ homes, pick up large and small electronics and appliances, and ensure they’re responsibly recycled.

Best Buy expects its fiscal 2023 financial results to be softer than last year as there are no planned stimulus checks or other widespread government support in America, which both helped bolster the previous two years of unusually strong demand.

Still, the company will continue to invest in its future, planning for increased promotional activity and higher supply chain expenses.

For fiscal 2023, the company revised down its sales and comps guidance and now expects sales of $48.3–$49.9 billion, compared to the prior guidance of $49.3–$50.8 billion, representing a decline of 3.7%–6.8% year over year. It expects a comp decline of 3.0–6.0% year over year, compared to prior guidance of a decline of 1.0%–4.0%. Best Buy also revised down its adjusted EPS guidance and now expects it to be in the range of $8.40 to $9.00, compared to the prior guidance of $8.90–$9.20, down 10.1%–16.1% year over year.

For the second quarter of fiscal 2023 (2Q23), Best Buy anticipates that its comp sales and the year-over-year decline in its adjusted operating margin will both be very similar to the first-quarter results. 

Big Lots’ total sales decreased by 15.4% year over year, versus a 0.3% decline in the previous quarter. On a year-over-year basis, the company’s comparable sales declined by 17.0%, while its adjusted EPS declined by 85.1%. Due to high freight costs and markdowns, its gross margin declined by 350 bps year over year to 36.7%.

Management stated that the sales decline was primarily due to the spending pressures its customers felt from higher gas prices and broader inflation.

CEO and President Bruce Thorn told analysts:

Trends materially slowed in April and drove the need to be more promotional. We believe the slowdown was caused by spending pressure our consumers felt from higher gas prices and broader inflation which is affecting discretionary purchases across the retail industry. We felt the early brunt of this due to our lower-income customer being the most immediately affected.

Unlike a number of other discount formats (namely, dollar stores), furniture comprises a substantial proportion of Big Lots’ sales mix. Management reported that furniture and soft home were “well down” versus planned in the quarter; as a result, the company said it will need to clear through excess inventory and adjust its opening price points in these categories.

In terms of the company’s owned brands, Broyhill and Real Living continued to perform well. Across all divisions, both brands represented close to 30.0% of the company’s total sales, up from the mid-20s last year.

According to management, e-commerce sales remain “a standout” and now account for over 7.0% of the company’s total sales, with same-day deliveries growing 20.0% year over year.

Despite tough traffic versus the stimulus-fueled quarter a year ago, Big Lots added 1.2 million new rewards members during the quarter, bringing the total number of rewards members to around 22 million.

The company opened seven new stores and closed four during the quarter, bringing its store count to 1,434 and its total selling space to 32.8 million square feet.

At the end of the fourth quarter of 2021, inventory was 48.5% higher than 1Q22 due to significantly higher unit costs and increased in-transit inventory. 

In 2Q22, Big Lots expects its three-year comps to accelerate to positive mid-to-high-single digits, “equating to mid-to-high single digit negative comps versus 2021.” The company expects new stores to add about 150 bps of growth versus 2021. It also predicts its second-quarter total inventory will be up in the low-20s versus 2021, a significant reduction from its first-quarter inventory levels.

The company forecasts that promotional activity will drive its second-quarter gross margin rate into the low-30s. The company plans to take aggressive actions to improve its gross margin rate in the back half of the year, expecting to achieve significant sequential improvement in the third quarter—with a fourth quarter in line with the prior-year quarter.

For fiscal 2022, Big Lots expects capital expenditures of around $175 million. Meanwhile, it expects its total store count to grow by 30-plus stores in 2022 versus its prior guidance of 50-plus stores. 

Dollar General’s total sales increased by 4.2% year over year, versus 2.8% growth in the prior quarter. The company stated that the increase was driven by positive sales contributions from new stores and partially offset by a slight decline in same-store sales and the impact of store closures. Comparable sales declined by 0.1% year over year due to decreased customer traffic, despite being partially offset by an increase in the average transaction amount. The company’s diluted EPS declined by 14.5% year over year. Its comp sales in 1Q22 declined in the seasonal, apparel, and home products categories, but increased in the consumables category.

Dollar General’s gross margin decreased by 151 bps year over year to 32.8%. The company stated that this decline was primarily because of higher production, transportation and distribution costs and a greater proportion of sales coming from the consumables category, which generally has a lower gross margin than other product categories. Increases in both markdowns as a percentage of sales and inventory damages also contributed.

Striking an upbeat tone, Todd Vasos, CEO, told analysts: 

The consumer, overall, has been fairly resilient through this hyperinflation that we've seen, not only in the products that she has to buy, but the fuel she has to put in her car and other means. So, I would tell you that the consumer is holding up well. 

We're already starting to see that our core customers start to shop more intentionally, and we're starting to see that next tier of customers start to shop with us a little bit more as well.

The company’s non-consumables initiative (NCI)—an expanded assortment in key non-consumable categories including home, domestics, housewares, and party and occasion—was available in nearly 13,000 stores at the end of the quarter. Management stated it is seeing strong sales and margin performances across its NCI store base, driving an average 2.5% increase in total comp sales in NCI stores.

The company opened 11 new Popshelf stores during the quarter, bringing the total count to 66. Launched in 2020, Popshelf is a concept store that aims to engage customers by offering a different experience through continually refreshed merchandise, with about 95% of items priced at $5 or below.

Dollar General’s merchandise inventories were $6.1 billion at the end of the quarter, representing a year-over-year increase of 19.4% overall and 13.3% on a per-store basis. This increase reflects the impact of product cost inflation and a greater mix of higher-value products, according to the company. 

Despite the ongoing uncertainties arising from product cost inflation and supply chain pressures, Dollar General raised its sales and comp sales guidance and reiterated the remainder of its financial guidance.

For fiscal 2022, the company expects 10.0%–10.5% revenue growth year over year, compared to its prior guidance of 10.0% growth. It expects 3.0%–3.5% comp growth year over year, compared to the previous guidance of 2.5%, and expects EPS growth in the range of 12.0%– 14.0% year over year.

It plans to spend $1.4–1.5 billion in capital expenditures in fiscal 2022. The company also reiterated its plans to execute 2,980 real estate projects in fiscal 2022, including 1,110 new store openings, 1,750 remodels and 120 store relocations. The company also plans to expand internationally, with the goal of opening up to 10 stores in Mexico by the end of 2022. 

Dollar Tree reported a revenue increase of 6.5% year over year, versus 4.6% growth in the prior quarter. Its comparable sales increased by 4.4%, while its EPS increased by 48.1%.

The company’s gross margin was up 360 bps year over year to 33.9%, driven by improved initial mark-on, favorable product mix in the Dollar Tree segment and leverage on distribution and occupancy costs. This was partially offset by higher freight costs and markdowns.

President and CEO Mike Witynski said, “During the quarter, the Dollar Tree team successfully completed its conversion to the $1.25 price point, contributing to both sales and margin improvements. Shoppers are responding favorably as the new greater value products hit our shelves. Importantly, other key strategic initiatives, including the expansion of the $3 and $5 Plus assortment in our Dollar Tree stores, as well as our Combo Stores and H2 renovations at Family Dollar are all working.”

By banner, Dollar Tree comp sales increased by 11.2% year over year, driven by a 15.4% increase in average ticket and partially offset by a traffic decline of 3.6%. Family Dollar comp sales decreased by 2.8% year over year due to the significant stimulus dollars released in the prior year’s quarter. Additionally, for portions of 1Q22, approximately 400 Family Dollar stores were temporarily closed due to a product-related recall, negatively impacting the company’s quarterly comparable store sales by an estimated 200 bps.

In its first quarter, Dollar Tree opened 112 new stores, expanded or relocated 33 stores and closed 30. Additionally, the company expanded its multi-price Plus offering into an additional 790 Dollar Tree stores and completed 118 Family Dollar store renovations.

For fiscal 2022, Dollar Tree raised its sales, comp sales and EPS guidance and now expects sales of $27.8–28.1 billion, compared to prior guidance of $27.2–27.9 billion, representing 5.7%–6.8% year-over-year sales growth. The company estimates EPS in the range of $7.80–$8.20, compared to prior guidance of $7.60–$8.00, representing growth of 34.5%–41.4%. It expects mid-single-digit comp sales growth compared to the previous guidance of low- to mid-single-digit.

For 2Q22, the company expects net sales of $6.7–6.8 billion (year-over-year growth of 5.7%–7.3%) based on a low to mid-single-digit increase in comp sales. It expects EPS for the quarter in the range of $1.50–$1.60, representing year-over-year growth of 21.9%–30.1%. 

Five Below’s total revenues increased by 7.0% year over year, versus 16.1% growth in the prior quarter. Comparable sales declined by 3.6% year over year, while EPS declined by 32.9% year over year.

The company’s gross margin declined by 130 bps year over year to 32.3% due to fixed cost deleverage on a negative comp. Its operating margin declined by 400 bps year over year to 6.6%.

During the quarter, the company opened 35 new stores, increasing its store count to 1,225 in 40 states, representing a year-over-year increase of 12.7%. 

Inventory at the end of the first quarter was $504 million, compared to $327 million at the end of the first quarter last year. Average inventory on a per-store basis increased by approximately 37.0% year over year due to accelerated merchandise receipts and higher inbound freight costs. 

CEO Joel Anderson stated, “While first quarter sales were softer than expected, disciplined cost management enabled us to deliver against our earnings outlook. We are well positioned from an inventory standpoint with improved in-stocks and accelerated receipts for summer and back to school. With the planned openings and conversions in fiscal 2022, we are on track to end the year with nearly half of our stores in the new Five Beyond format.”

The company also unveiled a new model, which “features a Five Beyond destination, our store within a store concept, which showcases reimagine, Tech and Room worlds, while also doubling the SKUs dedicated to Five Beyond,” according to its first-quarter earnings call on June 8, 2022. The company plans to convert over 750 of its current stores into this latest format over the next four years.

For the second quarter of fiscal 2022, Five Below expects net revenue growth in the range of 4.4%–7.5% year over year—assuming comparable sales decline in the range of 2.0%–5.0% year over year and the company hits its goal of opening of 30 new stores. EPS is expected in the $0.70–$0.90 range, representing a decline of 21.7%–39.1% year over year.

For the full fiscal year 2022, Five Below expects revenue growth to be in the 7.1%–10.7% range year over year, based on its goal to open 160 net new stores and assuming an approximate flat to 2.0% decrease in year-over-year comparable sales. EPS is expected to be in the range of $4.90–$5.20, representing flat to 5.0% growth year over year. 

CVS Health reported revenue growth of 11.2% year over year, versus 10.1% growth in the previous quarter. Its adjusted EPS increased by 8.8% year over year. 

Adjusted operating income increased by 6.6% year over year due to increased prescription and front store sales volume, including the sale of Covid-19 over-the-counter (OTC) test kits, Covid-19 vaccinations in the retail segment and growth in specialty pharmacy in the pharmacy services segment. The company administered over six million Covid-19 tests and more than eight million Covid-19 vaccines nationwide during the quarter. 

By segment, health care benefits’ revenue increased by 12.8% year over year, driven by growth across all product lines. Its pharmacy segment’s revenues increased by 8.6% year over year, which the company attributed to increased pharmacy claims volume, growth in specialty pharmacy and brand inflation. Its retail business witnessed a 9.2% year-over-year sales increase, driven by increased prescription and front store sales volume.

In the first quarter, the company launched a new, omnichannel fulfillment option where consumers can purchase health and wellness products online with an option for free same-day pickup. The option will expand to 6,000 CVS community health destinations later this year. 

In its specialty pharmacy, CVS Health is now using Microsoft text analytics and robotics to automate the 40.0% of prescriptions that are still paper or fax-based, making it easier and faster for the company to fill the patient’s prescription. 

CVS Health raised its full-year 2022 guidance for adjusted EPS and now expects it in the range of $8.20–$8.40, compared to earlier guidance of $8.10–$8.30, representing growth of 3.5%–6.0% year over year. The company also reiterated its full-year 2022 cash flow from operations guidance range of $12.0–13.0 billion.

In 2022, the company anticipates capital expenditures in the range of $2.8–3.0 billion, as it plans to invest in technology and digital enhancements to improve the consumer experience and its community locations. 

Walgreens Boots Alliance reported revenue growth of 3.8% year over year on a constant-currency basis, versus 7.6% growth in the prior quarter. Adjusted EPS was up by 26.5% year over year on a constant-currency basis.

By geography, US sales increased by 1.2% on a constant-currency basis, while US comp sales increased 9.5% year over year. Adjusted gross profits increased by 13.7%, driven by strong retail sales growth and Covid-19 vaccinations and testing. US adjusted operating income increased by 36.5%, while international sales increased by 7.5% year over year on a constant-currency basis. Adjusted gross profit increased internationally by 15.2% year over year, reflecting strong UK growth of 15.2%, notably from higher retail store transactions. Adjusted operating income internationally was up by 60.7% year over year.

Walgreens’ digital sales increased by 38.0% year over year in the US, and same-day pickup orders accelerated to 3.9 million orders. The company enrolled over 96 million people in myWalgreens—a membership program where members receive Walgreens cash rewards on eligible purchases—with 11 million joining since the fourth quarter of fiscal 2021.

During the second quarter of fiscal 2022 (ended February 28, 2022), Walgreens administered 11.8 million Covid-19 vaccinations and 6.6 million Covid-19 tests in the US. 

Albertsons raised its comp sales guidance for fiscal 2022 and now expects comp sales growth in the range of 2.0%–3.0% year over year compared to prior guidance of (0.8)%–(1.2)%. It expects EBITDA in the range of $4.2–$4.3 billion and adjusted EPS of $2.70–$2.85, representing a decline of 7.2%–12.1% year over year.

The company expects to spend $2.0–$2.1 billion in capital expenditures in fiscal 2022.

Total sales increased by 4.0% year over year, versus 7.0% decline in the previous quarter. The company’s comparable-store sales increased by 1.6% year over year, supported by positive comp transactions, while diluted EPS increased by 12.9% year over year. Due to inflationary costs, its gross margin was flat year over year at 37.3%. 

E-commerce sales were 11.5% of total sales, which were slightly elevated during the early part of the quarter due to the Omicron surge. The company continues to see its customer engagement grow from a digital standpoint with increases in account sign-ups, active e-mail users and tech subscriptions. 

In the first quarter, the company continued to experience strength in its deli business as consumers searched for healthy and easy meal options. It also experienced strength in areas with the greatest selection of products such as grocery, dairy and vitamins. 

CFO Lawrence Molloy stated, “Inflation is not slowing, and customers continue to put a few less items in their basket this year than last. We can speculate a variety of reasons as to why the fewer units. Rising gas and utility prices, of late of precious discretionary dollars to more experiential offerings such as travel or restaurants, et cetera.” 

During the quarter, the company opened six new stores, closed one store and spent $22 million in capital expenditures.

For fiscal 2022, the company expects sales growth, comparable store sales growth and EPS at the lower end of the previously provided guidance of sales growth between 4.0% and 6.0% year over year, comp store sales growth of 0.0%–2.0% year over year and adjusted EPS in the $2.14–$2.24 range, representing 1.9%– 6.7% year-over-year growth. 

The company will continue its plan to open 15–20 new stores in 2022 and invest $150–170 million in capital expenditures, including the potential relocation of one of its distribution centers to a larger facility. 

For the second quarter of fiscal 2022 (2Q22), the company expects flat comp store sales year-over-year growth and EPS between $0.49 and $0.53, representing growth of (5.8)%–1.9% year over year. 

Weis Markets reported 9.7% sales growth year over year, versus 8.0% growth in the prior quarter, while comp sales increased by 9.4% year over year, accelerating sequentially from the fourth quarter of 2021’s year-over-year increase of 6.9%. Diluted EPS increased by 30.0% year over year.

CEO Jonathan Weis said, “We continued to build on our momentum in the first quarter, when we generated strong comparable store sales and net income increases. Despite significant inflationary pressures, we were able to maintain stable gross profit margins and effectively manage expenses.” 

Target’s total sales increased by 4.0% year over year, versus 9.4% growth in the prior quarter. The company’s comparable sales increased by 3.3% year over year—on top of 22.9% growth last year— but adjusted EPS declined by 40.9%.

Sales gains were undone by a decline in gross margin by 430 bps year over year to 27.5%, which was well below the company’s expectations. Increases in supply chain costs contributed about 100 bps to the gross margin fall, reflecting the impact of a higher headcount and compensation in distribution centers. Merchandising issues drove 300 bps of the decline as shoppers passed up higher-margin, big-ticket items such as home furnishings and apparel in favor of essentials or low-margin items such as groceries and beauty. The shift heightened inventory levels, which in turn necessitated markdowns. At the same time, the company’s operating income margin was also far lower than it anticipated, at a rate of 5.3%—a 450 bps year-over-year decline—due to gross margin pressure reflecting the actions taken by the company to reduce excess inventory, as well as higher freight and transportation costs.

By category, the company continued to see strong growth and market share gains in food and beverage and essential categories, which all saw double-digit sales growth year over year. The beauty category also saw double-digit sales growth year over year. However, Target saw a slowdown in the year-over-year sales growth trend for the company’s other three merchandise categories: apparel, hardlines and home.

In the first quarter, the company opened seven stores—all smaller formats—in a range of markets, including Jackson Hole, Wyoming, and Times Square in New York City. In stores and markets most affected by Covid-19, including college towns, tourist destinations and dense urban areas, the company has continued to see a rapid recovery in sales volumes as activity ramps back up.

For fiscal 2022, Target continues to expect low-to-mid-single-digit sales growth year over year. However, it expects its operating margin to be well below its prior guidance of 8.0%.

Target expects global supply chain pressures to remain until early 2023; therefore, elevated costs will continue to affect profitability in 2022. It also expects a wide range for its second-quarter operating margin rate, centered around its first-quarter rate of 5.3%. 

Walmart reported revenue growth of 2.4% year over year, versus 0.5% growth in the prior quarter, while adjusted EPS declined by 23.1% year over year. First-quarter revenues were “negatively affected by $5.0 billion due to divestitures,” with strategic divestments in Argentina, Japan and the UK.

According to the company, workers that had been on Covid-19 leave returned to work sooner than expected, raising the company’s wage bills. Snarled supply chains increased scheduled-related and storage costs as inflationary pressures left consumers leaning toward essentials from high-margin big-ticket items, which hurt Walmart’s US gross profit by about $100 million. CEO Doug McMillon said, “The rate of inflation in food pulled more dollars away from GM [general merchandise] than we expected as customers needed to pay for the inflation in food.” In addition, fuel cost $160 million more than expected. As a result, the company’s gross margin decreased by 89 bps year over year. Operating income declined by 23.0% year over year, due to gross margin pressure and expense deleverage.

Walmart’s US segment (excluding Sam’s Club) reported comp growth of 3.0% year over year, with continued market share gains in grocery. Its e-commerce sales grew 1.0%, year over year, despite e-commerce operations being affected early in the quarter by the loss of one of its largest fulfillment centers to a fire.

Sam’s Club US posted comp growth of 10.2% year over year (excluding fuel and tobacco). Sam’s Club membership income increased by 10.5% as membership increases reached another all-time high during the quarter. Walmart International saw a 13.0% sales decline year over year, negatively affected by $5.0 billion due to divestitures in Walmart Argentina and UK grocery chain, Asda.

Walmart GoLocal, a last-mile delivery solution, continued to add new partners to its delivery platform, reaching more than 1,600 delivery points in the US at the end of the quarter.

During the quarter, Walmart expanded Walmart Health to Florida with the opening of four new locations. Additionally, with the launch of Flipkart Health Plus in India—following the acquisition of online pharmacy platform SastaSundar.com—the company can increase access to affordable care in India. 

For fiscal 2023, Walmart raised its sales and US comp guidance and now expects sales growth of 4.0% year over year, compared to prior guidance of 3.0% growth, and US comp growth of 3.5%, compared to previous guidance of 3.0% growth. However, the company revised down its EPS guidance and now expects it to decline by 1.0% year over year, compared to the prior guidance of mid-single-digit growth.

For 2Q23, the company expects sales to increase by over 5.0% year over year and US comp sales growth to be 4.0%–5.0% year over year. Walmart expects EPS to be flat to up slightly year over year. 

1. Growing and retaining members:In the first quarter, the company’s member count grew 5.0% year over year, reaching 6.5 million members, driven by a combination of strong renewals and membership acquisition related to new club growth.
2. Delivering value:In terms of membership quality, easy renewal enrollment was up to 76.0%, compared to 72.0% in the same quarter last year. At the same time, higher tier membership penetration grew by 36.0%.
3. Improving convenience with digital: The company saw robust growth in all digital channels, particularly in buy-online-pickup-in-store and curbside.

For full-year 2022, BJ’s reiterated its EPS guidance and expects it to be flat year over year, believing that first-quarter excess gas profits will be largely offset by heightened margin pressures driven by growing supply chain costs. In the long-term, the company expects mid-single-digit sales growth.

The company expects to open 11 clubs in 2022 and another 10 in 2023.

Floor & Decor Holdings reported 31.5% sales growth year over year, versus 8.3% growth in the prior quarter. Comp sales increased by 14.3% year over year, driven by a 16.7% increase in average ticket total. Meanwhile, adjusted EPS declined by 1.5% year over year. 

The company’s first-quarter gross margin decreased by 340 bps year over year to 39.7% due to higher supply chain and freight costs. 

The company’s e-commerce sales increased by 46.0% year over year and accounted for 17.7% of total sales. 

First-quarter demand for hard surface flooring remained strong—particularly among professionals—with broad-based strength across most merchandise categories and all store classes. 

Management stated that West Coast ports remain its most significant challenge. However, the company will continue to divert through other ports and increase its dray capacity to minimize this impact. 

The company opened six new warehouse stores and three design studios during the first quarter, ending the quarter with 166 warehouse stores and five design studios. 

For fiscal 2022, the company reaffirmed its financial guidance and expects sales to be $4.3–4.4 billion—representing 26.5%–29.4% year-over-year growth—and comp sales growth to be 10.5%–13.0% year over year. It expects diluted EPS to be $2.75–$3.00, representing growth of 12.7%–23.0% year over year. 

Floor & Decor Holdings will continue its plan to open 32 new warehouse-format stores and four small design studios in 2022. The company expects capital expenditure to be $550–590 million in 2022.

The Home Depot’s total sales increased by 3.8% year over year, versus 10.7% growth in the prior quarter. The company’s comparable sales increased by 2.2% year over year, with US comps of 1.7%, while EPS increased by 6.0% year over year. The company’s gross margin was down 20 bps year over year to 33.8% due to transportation and product cost pressures, and its operating margin was down 15.2%, a decline of 20 bps year over year.

During the fourth quarter, 11 out of The Home Depot’s 14 merchandise departments posted positive comps year over year, led by the plumbing, building materials, millwork and paint departments. The company’s seasonal departments saw double-digit negative comps due to the late arrival of the spring season.

The Home Depot saw continued strength in its pro and do-it-yourself (DIY) segments during the quarter, with pro sales growth continuing to outpace DIY growth.

On a comparable basis, the average ticket increased by 11.2% year over year, driven primarily by inflation across several product categories and demand for new and innovative products. Comp transactions declined by 8.4% year over year due to the late start of the spring season. 

For fiscal 2022, The Home Depot raised its sales and comp guidance and now expects both sales and comp growth of 3.0% year over year, compared to prior guidance of slightly positive sales and comp growth. The company also raised its diluted EPS guidance, expecting it to grow by a mid-single-digit percentage, compared to the prior guidance of low-single-digit growth.

The Home Depot raised its operating margin guidance as well, expecting it to be 15.4%, compared to the prior guidance of flat year over year. 

Total sales for Lowe’s declined by 2.9% year over year, versus 4.9% growth in the prior quarter. The company’s comparable sales declined by 4.0% year over year, with US comparable sales declining by 3.8% year over year. The company attributed its sales decline to unseasonably cold temperatures in April 2022, as 75.0% of its customer base is DIY. The company’s EPS increased by 9.3% year over year, and its gross margin was up 74 bps year over year to 34.0%, as the company leveraged disciplined cost management strategies to handle product cost inflation and lumber price volatility.

Online sales grew 2.0%—on top of over 36.0% growth in 1Q21—and represent around 10% e-commerce sales penetration.

The company converted its fourth geographic area, the Tennessee and Kentucky region, to a market-based delivery model for big and bulky products, which are now delivered directly to customers’ homes, bypassing stores altogether. According to the company, it is on track to convert all stores to market-based delivery by the end of 2023.

In the first quarter, the company delivered strong comps in building products, driven by the momentum in the pro segment, while sales in home decor came in above the company’s expectations due to solid DIY demand. Within the home decor division, paint and flooring delivered the strongest comps in the quarter. Specifically, within paints, the biggest growth drivers were primers and interior and exterior paint, with stocks continuing to improve throughout the quarter. Within flooring, luxury vinyl was once again the top contributor as consumers prefer its style and low maintenance. Comps in the building products division were also strong, driven by sales growth across building materials, electrical, lumber, millwork, and rough plumbing. 

For full-year 2022, Lowe’s reaffirmed its financial guidance. It expects sales to be in the range of $97.0–99.0 billion, representing growth of 0.7%–2.8% year over year. It expects comp sales to either fall or rise by 1.0% year over year and EPS to be in the range of $13.10–$13.60, representing 8.8%–12.9% growth year over year. It expects its operating margin to be in the range of 12.8%-13.0%.

The company expects capital expenditures of around $2 billion for full-year 2022 and its gross margin to be up slightly compared to the prior year. 

RH’s total revenues increased by 11.0% year over year, in line with the prior quarter, while its adjusted EPS increased by 59.0% year over year. The company’s adjusted gross margin was up 480 bps year over year to 52.1% due to a 390 bps increase in product margins and lower promotional activities as demand trends slowed.

CEO Gary Friedman stated, “Our strategy comes full circle as we begin to conceptualize and sell spaces, moving beyond the $170 billion home furnishings market into the $1.7 trillion North American housing market with the launch of RH Residences, fully furnished luxury homes, condominiums and apartments with integrated services that deliver taste and time value to discerning time-starved consumers. The entirety of our strategy will come to life digitally as we launch The World of RH, an online portal where customers can explore and be inspired by the depth and dimension of our brand.” 

Based on current market trends and the uncertain macro-economic environment, RH has revised down its guidance for 2Q22 and fiscal 2022.

For 2Q22, RH expects a revenue decline of 1.0%–3.0% year over year versus its prior guidance of 7.0%–8.0% growth. It expects its adjusted operating margin to be in the range of 23.0% to 23.5%.

For fiscal 2022, the company now expects revenue growth of 0.0%–2.0%, compared to its prior guidance of 5.0%–7.0% growth. It expects its adjusted operating margin to be in the range of 23.0% to 24.0%, compared to its prior guidance of 25.0% to 26.0%.

Tractor Supply Company reported an 8.3% year-over-year increase in revenue—versus 15.3% growth in the prior quarter—while comp sales increased by 5.2% on top of 38.6% comp sales growth last year. Diluted EPS increased by 6.5% year over year.

Gross margin rate declined by 29 bps year over year to 34.9% due to high product and transportation costs inflation. Operating profits increased 6.0% year over year.

Tractor Supply Company management noted that the consumable, usable and edible (CUE) category experienced strong demand. These products are need-based and demand-driven, meaning they drive trips to stores. The CUE sales growth was almost three times that of the company’s overall sales growth rate. Meanwhile, the company saw double-digit year-over-year e-commerce growth, and its mobile app now represents more than 15.0% of its digital sales.

Tractor Supply Company’s Neighbor’s Club program reached 24.8 million members in the quarter, an 24.0% increase year over year.

Tractor Supply’s new store openings were delayed during the quarter by prolonged impacts from the pandemic and challenges facing the construction industry. 

Tractor Supply Company reiterated its fiscal 2022 financial outlook and continues to expect sales of $13.6–$13.8 billion, representing growth of 6.8%–8.4% compared to fiscal 2021. Comparable sales are expected to grow between 3.0% and 4.5% year over year. The company expects its operating margin to be 10.2% and its EPS between $9.20 and $9.50, representing growth of 6.9%–10.3% compared to fiscal 2021.

Fiscal 2022 consists of 53 weeks, one week more than fiscal 2021. The company estimates the benefit of the 53rd week is anticipated to be worth around 1.5 percentage points of net sales and a $0.15 contribution to EPS in fiscal 2022.

The company continues to target opening between 75 and 80 new Tractor Supply stores in fiscal 2022. 

Wayfair reported a 13.9% decline in revenues year over year, versus an 11.4% decline in the previous quarter, due to new macroeconomic and geopolitical headwinds which exacerbated inflationary pressures and subdued some customer sentiment, particularly in Europe. Adjusted EPS was $(1.96) for the quarter. 

The company’s gross margin was down 200 bps to 26.9% year over year due to higher transportation and energy costs, as well as labor expenses. 

By geography, US net revenue declined by 9.9% year over year, while international net revenue declined by 31.4%. 

During the quarter, the total number of orders delivered was down 29.0% year over year, and active customers declined by 23.4% year over year. However, net revenue per active customer increased by 12.8% year over year. 

Wayfair CEO Niraj Shah said, “Consumer spending is still climbing for retail overall. However, even with a relatively healthy individual balance sheet, shoppers are nonetheless diverting a larger share of their wallets to nondiscretionary categories, and reprioritizing experiences like travel. Reflecting these trends within our business we’re seeing more strength from luxury and professional customers vis-à-vis mass shoppers.” 

Williams-Sonoma’s total revenues increased by 8.1% year over year, versus 9.1% growth in the prior quarter. Its adjusted EPS increased by 19.5% year over year, while comparable sales grew 9.5% year over year.

The company’s gross margin expanded by 80 bps year over year to 43.8%, driven by high merchandise margins and an occupancy cost leverage of 20 bps.

By brand, West Elm comp sales increased by 12.8% on top of 50.9% last year, driven by strong performance in the furniture category and new categories such as kids and bath. Pottery Barn’s comp sales increased by 14.6% on top of 41.3% last year, with all channels and product categories contributing to driving incremental demand; however, Pottery Barn Kids and Teens saw comp sales decline by 3.1% year over year due to supply chain disruptions out of Vietnam. Williams Sonoma’s comp sales decreased by 2.2% year over year.

Merchandise inventories increased by 28.4% year over year, while on-hand inventory increased by 17.7% year over year. However, management stated that the company’s inventory levels are still not aligned with high product demand due to significant macro supply chain disruptions. Williams-Sonoma expects to return to more normalized inventory levels by the latter half of 2022.

Management stated that the current economic environment is challenging, but the housing market remains strong. Hybrid work culture, where people continue to spend more time in their homes, and rising gas costs have historically led people to stay at home to cook and entertain. The company believes that these trends will result in continued momentum in the strong housing market, which will improve its sales in the coming months.

Signet Jewelers’ total revenues increased by 8.9% year over year, versus 28.6% growth in the prior quarter. Comparable sales increased by 2.5% year over year and adjusted EPS increased by 28.3% year over year.

Signet’s gross margin was down 80 bps year over year to 39.4%—a similar merchandise margin to last year—reflecting the strength of Diamonds Direct’s bridal business, which carries a lower relative margin. Meanwhile, the company’s operating margin was up 60 bps year over year to 10.6% due to the company’s diligent cost discipline and agile execution.

CEO Virginia Drosos stated, 

We saw a deceleration in traffic in late March as we began to lap the impacts of last year's stimulus, alongside heightened inflation and the war in Ukraine. These factors led to softer demand at lower price points across our banners. In response, we planned ahead. We leveraged our scale, vertical integration capabilities and strategic vendor relationships to value engineer pieces that made jewelry more affordable for all our customers. We've also selectively increased prices this quarter, though well below the inflation we've seen overall in the industry.

By region, North America’s sales increased by 5.4% year over year, while its comp sales declined by 0.9% year over year, reflecting a higher average transaction value (ATV) and a lower number of transactions. International sales increased by 91.6% year over year, and its comp sales increased by 102.6% year over year, reflecting prior year store operating restrictions, higher ATV and a higher number of transactions.

Management stated that nearly all banners delivered their strongest sales growth at price points above $3,000 in both bridal and fashion categories. In bridal, Signet saw strong sales growth in wedding and anniversary bands—reflecting the number of weddings occurring in 2022, a 40-year high, according to the company. In fashion, the company continued to see sales growth in gold with strength at higher price points. In services, it delivered substantial sales growth with higher attachment rates of service plans, coupled with the previously mentioned higher price point growth. It also saw growth in care and repair services as more consumers returned to public shopping spaces.

Capri Holdings reported a sales increase of 24.6% year over year, versus 24.0% growth in the prior quarter. Management attributed the growth to better-than-expected results at all three of its brands: Versace, Jimmy Choo and Michael Kors.

The company’s gross margin expanded by 250 bps year over year to 64.1%. Its operating margin was 8.0%, returning to positive territory compared to an operating margin of (11.6)% in the prior year’s fourth quarter. The company posted a 48.9% increase in net inventory versus last year; management remarked that this is in line with its plans to accept seasonal merchandise earlier in the year and hold a greater quantity of its core inventory.

By brand, Versace performed the strongest, with sales up 34.0% year over year. Meanwhile, Jimmy Choo sales increased by 25.8% year over year, and Michael Kors sales grew by 21.8%.

By geography, management stated that the Americas’ sales performance exceeded expectations significantly, growing 30.0% and, if not for inventory constraints around inventory, growth may have been greater. In the Europe, Middle East and Africa (EMEA) region, sales were up 33.0%, despite the impact of the Russia-Ukraine war on certain parts of the region. In Asia, sales were up 2.0%, reflecting improving trends in Japan and Southeast Asia; however, it was partially offset by a sales decline in Mainland China due to Covid-19 related restrictions and lockdowns.

Management remarked that fiscal 2022 results significantly exceeded original expectations, as full-year revenues, gross margin and EPS were at their highest points in the company’s history. In 2022, revenues were up 39.2% year over year, while its gross margin was 66.2%, up 230 basis points versus last year, and its diluted EPS came in at $5.39. 

In the first quarter of fiscal 2023, Capri expects total revenue of $1.3 billion, representing year-over-year growth of 4.0%, and a diluted EPS of $1.35, a 4.3% year-over-year decline.

For fiscal 2023, the company expects total revenue of $5.9 billion, representing 5.0% year-over-year growth, and a diluted EPS of $6.85, representing 27.1% growth. The company forecasts that the stronger dollar will adversely impact reported revenue by approximately $100 million; therefore, at constant currency, its expected revenue growth will be 10%. The company also anticipates a negative impact of about $50 million on revenue due to the extended Covid-19 related restrictions in China. 

Tapestry reported 12.9% year-over-year growth in its second quarter, versus 27.0% growth in the prior quarter, reflecting strong double-digit growth across all three brands. Adjusted EPS increased by 15.7% year over year. Digital sales increased by 20.0% year over year.

Gross margin declined by 160 bps year over year to 69.9% due to an incremental impact of 440 bps from higher freight costs.

By brand, Stuart Weitzman’s revenues were up 11.0% year over year. Kate Spade’s revenues were up 19.0% year over year, including a 25.0% increase in North American business. Coach revenues were up 11.0% year over year, including a nearly 20% gain in North America.

By geography, North American revenues were up 22.0% year over year, reflecting growing demand for all brands. In Mainland China, sales were down in the mid-teens year over year, as close to 40% of its store network in China was closed (or open modified hours) due to Covid-19-related lockdowns. In Europe, sales were up 60.0% year over year, reflecting improving trends related to local demand. In Japan, sales were up in the mid-single-digits versus last year, as Covid-19 lockdowns and cases eased in the region.

During the quarter, the company acquired over 1.4 million new customers who transacted with its brands across channels in North America, representing a mid-teens increase compared to the prior year, with continued sales growth in both stores and online.

Petco’s total revenues increased by 4.3% year over year versus 13.0% in the prior quarter. Comparable sales increased by 5.1% year over year, and adjusted EPS was $0.20, in line with the previous year’s first quarter. Gross margin declined by 102 bps year over year to 41.2% due to high supply chain and commodity costs. Petco added around 400,000 net new customers, representing double-digit year-over-year growth.

Petco’s digital revenue increased by 11.0% year over year. Its digital channels continue to show meaningful gross profit improvements, driven by improved operating efficiencies, including its recently renegotiated contract with the online delivery platform DoorDash.

The company stated it saw some softening in discretionary spending, but its total merchandising mix remains strong overall. By brand, WholeHearted, So Phresh Litter and Reddy all delivered double-digit year-over-year sales growth.