Introduction

Our fourth-quarter 2021 (4Q21) wrap-up covers the quarterly earnings of 61 (mostly) US-based retailers, brands, e-commerce platforms in the recently updated Coresight 100.

• About 71% of companies beat revenue consensus estimates, while 26% missed revenue consensus estimates and 3% were in line with expectations. In terms of earnings, 77% of companies beat consensus estimates, while 16% missed consensus expectations and 7% were in line with expectations.
• Apparel and footwear, beauty brands and retailers, CPG companies, drugstores, food retailers, luxury companies and pet care retailers enjoyed a stronger quarter (versus expectations): More than 80% of covered companies beat consensus revenue estimates. Furthermore, 100% of covered beauty brand owners, department stores, drugstores, e-commerce players, electronics retailers, food retailers, mass merchandisers, pet care retailers and warehouse clubs beat consensus EPS estimates.
• Discount stores, e-commerce platforms, electronics retailers, home and home-improvement retailers, mass merchandisers and warehouse clubs were the worst-performing sectors (versus expectations) of the quarter, with 50% or more of covered companies in each sector missing consensus revenue estimates.

However, beating or meeting consensus does not necessarily indicate positive results. As retailers navigate the Covid-19 crisis and supply chain headwinds, pace of sales recovery is a much better indicator of the health of retailers than benchmarking versus consensus. Company results in the latest completed fiscal quarter, which ended January 30, 2022, for most companies in our coverage, include key commentary and qualitative insights from major US retailers and brand owners on their recent performance, in terms of revenues and comps, and the impact of the coronavirus pandemic. Although we term the period under review “4Q21,” some companies in this report describe their latest quarter differently; some also have different quarter-end dates. In October 2021, US retail sales saw a double-digit year-over-year increase, fueled by strong growth in several sectors, and sales increased by 23.2% on a two-year basis. In November 2021, US retail sales continued to see double-digit growth, with sales increasing by a strong revised 14.7% year over year and revised 24.7% on a two-year basis. In December 2021, US retail sales increased by 13.3% year over year and 22.3% on a two-year basis. However, sales growth slowed sequentially in December 2021, possibly reflecting some holiday season shopping being pulled forward into November 2021. In January 2022, US retail sales increased by a revised 9.4% year over year and 22.3% on a two-year basis, against strong 2021 comparatives, boosted by a strong month of job creation and continued average hourly wage growth. In February 2022, US retail sales increased by 12.8% year over year and 21.0% on a two-year basis, boosted by another strong month of job creation as average hourly wages continue to rise within a still-tight labor market. US retail traffic saw growth of 31.9% year over year in February 2022—higher than January’s growth of 26.9%, reflecting apparent deconsolidation of shopping trips, amid a decrease in Covid-19 cases and President’s Day holiday shopping. Below, we assess the recent performance of retailers, brand owners and e-commerce platforms in detail.

Apparel and Footwear Brand Owners

Overall, apparel and footwear brand owners have reported solid sales growth in the latest quarter. All the covered companies in this sector posted strong positive sales growth year over year. By category, demand for outerwear and activewear remained strong in both the men’s and women’s segments.

Carter’s, Inc. (NYSE: CRI) 4Q21
Details	The company’s total sales increased by 7.3% year over year, accelerating from 2.9% in the prior quarter. EPS increased by 2.0% versus 4Q20 but declined by 18.0% on a two-year basis. Adjusted operating margin was down 170 basis points (bps) year over year to 13.0%, due to higher transportation costs. By segment, US retail revenue increased by 3.0% year over year, driven by improved store traffic; US wholesale revenue increased by 9.0%, as a portion of sales volume moved into the fourth quarter from the third; and international revenue increased by 25.0%, driven by strong demand from Canada and Mexico. The kids’ apparel segment registered over 10% year-over-year sales growth in both sleepwear and playwear products. Baby apparel sales increased by 8.0%. During the quarter, the company invested in omnichannel capabilities in Canada, including same-day pickup and curbside pickup of online purchases—over 30% of Canada’s online purchases were picked up in stores.
Looking Forward	For fiscal 2022, Carter’s expects net sales growth in the range of 2.0% to 3.0% year over year, and adjusted operating income growth in the range of 4.0% to 6.0%. The company expects adjusted EPS growth of 12.0%–14.0%, year over year. For 1Q22, the company expects net sales of $740–750 million, down 4.7%–6.0% year over year. It expects an adjusted operating income of $85–90 million, down 29.9%–33.9% year over year. It expects adjusted EPS of $1.25–$1.35, a decline of 31.8%–36.9% year over year. For the five-year period fiscal 2021–2026, the company expects low-single-digit sales growth and mid-single-digit adjusted operating income growth. It projects adjusted EPS growth in the high single digits.

Columbia Sportswear Company (NYSE: COLM) 4Q21
Details	Columbia Sportswear’s net sales in the fourth quarter increased by 23.0% year over year and by 18.3% on a two-year basis. EPS increased by 66.0% year over year. Gross margin expanded by 160 bps year over year to 52.2%, from 50.6%  in the comparable period in 2020. Gross margin expansion was primarily driven by lower direct-to-consumer (DTC) promotional levels, strong retail sell-through performance resulting in higher wholesale product margins, and a favorable channel sales mix, partially offset by higher inbound freight costs and year-over-year changes in inventory provision activity. According to the company, Mountain Hardwear was its fastest-growing brand in 2021, with net year sales increasing by 33.0% year over year, followed by Columbia, which reported a sales increase of 28.0%. Growth was broad-based by channel, with its DTC business growing 33.0% and wholesale growing 18.0% year over year. In 2021, the company’s global DTC business represented 47.0% of net sales, including its e-commerce business, which represented 18.0% of total net sales. The company worked with its factory partners to successfully expand footwear capacity in 2022 across both its SOREL and Columbia footwear businesses. However, even with the additional footwear capacity, the company will not be able to fulfill all demand in the marketplace during the year. It is continuing to work with factory partners to further expand capacity for 2023 and beyond.
Looking Forward	The company expects net sales for full year 2022 to be in the range of $3.63–3.69 billion, representing net sales growth of 16.0%–18.0% year over year. The company expects diluted EPS of $5.50–$5.80, representing growth of 3.2%–8.8% from last year. On the technology front, the company is investing in digital and analytics capabilities to leverage consumer data, enhance the consumer experience across platforms, and drive efficiencies across the organization. It is also investing in enhanced supply chain capabilities to expand distribution capacity, improve inventory management, and adapt to shifts in the sales mix. Additionally, the company is investing in the expansion of its DTC store fleet. In North America, the company’s current plans call for opening around 15 new stores.

Crocs, Inc. (NasdaqGS: CROX) 4Q21
Details	Crocs reported revenue growth of 42.6%, year over year, and 123.0% on a two-year basis, in 4Q21. Adjusted EPS increased by 102.8%, year over year. By distribution channel, the direct-to-consumer (DTC) business, which includes retail and e-commerce, grew 44.5%, and wholesale revenues grew 40.3%. By geography, Americas’ revenue increased by 51.2% versus 4Q20, wherein DTC revenue increased by 49.3% and wholesale revenue by 52.6%; EMEA (Europe, Middle East and Africa) revenue increased by 22.5% year over year, wherein DTC revenue increased by 18.5% and wholesale revenue by 24.6%; and Asia revenue increased by 10.3% year over year. Within Asia, South Korea and India grew strongly in the quarter. In 4Q21, the company’s gross margin was up 770 bps to 63.4% year over year. Gross margin improved across all regions and channels, driven by increased prices and fewer promotions and discounts. During the quarter, Crocs’ inventory increased by 21.9% year over year, with most of the increase driven by rising in-transit inventory due to extended transit times. On January 11, 2022, Crocs filed a trademark application to get a non-fungible token (NFT)-based intellectual property for its new products, officially entering the metaverse.
Looking Forward	The company reiterated its full-year 2022 guidance and expects its revenue growth (excluding the HEYDUDE brand) to be over 20.0% compared to 2021. The company expects the revenue for HEYDUDE to be in the range of $700–750 million in 2022. For the full-year 2022, Crocs expects adjusted EPS to be in the range of $9.70–$10.30, representing growth of 16.6%–23.2%, year over year. For 1Q22, Crocs expects revenue growth of 31.0%–37.0%, year over year, assuming the HEYDUDE acquisition closes by the end of February 2022. The company has a plan to amplify the HEYDUDE brand through innovative marketing and leveraging Crocs’ strong wholesale relationships to extend distribution. The company believes that HEYDUDE will become a $1 billion brand by 2024. In 1H22, Crocs expects its gross margin to include an incremental $75 million of air freight. To support sales growth, the company expects to invest $170–200 million in capital expenditure in 2022, primarily to continue to expand and automate its distribution capabilities.

Deckers Outdoor Corporation (NYSE: DECK) 3Q22
Details	Deckers reported net sales growth of 10.2% year over year or 26.8% on a two-year basis. EPS decreased by 6.3% year over year, but increased by 17.9% on a two-year basis. By brand, UGG’s sales increased by 7.9% year over year—the majority of its growth was driven by men’s and kids’ footwear, women’s slippers and fluffy shoes, as well as apparel and accessories; HOKA’s net sales increased by 30.3%; Teva’s net sales increased by 31.4% and Sanuk’s net sales decreased by 13.4%. Other brands, including Koolaburra, saw a decrease in net sales of 16.6%. By channel, wholesale net sales increased by 7.3% and DTC sales increased by 13.4% year over year. By geography, domestic net sales increased by 3.3% year over year and international net sales increased by 27.5%. The company stated that in its fiscal year-to-date, the most significant macro-level supply chain impact the company has seen is extended transit lead times and cost pressures related to container shortages, port congestion, and trucking scarcity—which have caused shipping delays and a higher usage of air freight.
Looking Forward	For the full year 2022, the company expects its net sales to be in the range of $3.03–3.06 billion, representing growth of 21.2%–22.4% year over year. Its gross margin is expected to be at or slightly below 51.5% and its diluted EPS in the range of $14.50–$15.15, representing growth of 7.4%–12.6% year over year. The company stated that it continues to experience certain disruptions, delays and capacity constraints related to Covid-19.

Gildan Activewear Inc. (TSX: GIL) 4Q21
Details	The company’s total sales increased by 14.0% year over year and by 19.0% on a two-year basis. EPS increased by 68.9% year over year and by 85.0% on a two-year basis. Adjusted gross margin was up 480 basis points (bps) to 30.6% year over year, driven by higher net selling prices and manufacturing efficiencies. Adjusted operating margin was 20.4%, up 510 bps year over year. By category, activewear sales increased by 16.6% year over year, while hosiery and underwear sales increased by 3.2% year over year. By geography, US sales increased by 14.5% and Canada sales increased by 19.3%. International sales increased by 1.8%. During the quarter, the company reinforced its vertically integrated supply chain model by broadening its existing yarn capabilities through the acquisition of Frontier Yarns, a producer of spun yarns—which will help the company to expand its business in Central America and the Caribbean.
Looking Forward	The company’s sales CAGR outlook between 2021 and 2024 reflects net sales growth of 7.0%–10.0% and its operating margin is expected to be 18.0%–20.0%. Gildan expects investments in capital expenditures as a percentage of sales to be in the range of 6.0% to 8.0% over the three-year period.

Guess?, Inc. (NYSE: GES) 4Q22
Details	Guess? reported revenue growth of 23.4% year over year, accelerating from 13.0% growth in the prior quarter. Adjusted EPS decreased by 3.4% year over year. The company’s adjusted operating margin increased by 430 bps year over year to 15.7%, driven by overall leveraging of expenses, lower markdowns and higher initial markups. Guess? saw strength in both women’s and men’s outerwear, and, including its athleisure line. The company also stated that demand for handbags remained solid, but a lack of inventory due to supply chain delays in this category impacted the business in the fourth quarter. By region, the Americas’ retail revenues increased by 26.0% year over year, and wholesale revenues increased by 32.0% year over year. Europe’s total revenues increased by 30.0% year over year. Asia’s total revenues declined by 4.0%, with more than half of the decline arising due to permanent store closures in some areas. For fiscal 2023, Guess? remains confident that it will have the appropriate inventory, as the company ended the year with inventories up 19.0% year over year, has a higher portion of product in transit than last year and has placed orders earlier to mitigate inventory delay risk.
Looking Forward	For full fiscal year 2023, the company expects revenues to be up in the low-single digits year over year and its operating margin to be 10.5%—which is less than fiscal 2022—due to expected cost pressures in production, logistics and wages. For the first quarter of 2023, Guess? expects revenues to be up in the low-teens year over year, driven by wholesale growth and positive store comps. The company stated that the outlook for the full fiscal-year 2023 and its first quarter takes into account the significant disruptions in Russia.

Hanesbrands (NYSE: HBI) 4Q21
Details	Hanesbrands reported net sales growth of 4.0% year over year and 15.0% on a two-year basis, driven by strong consumer demand and point-of-sale (POS) trends in the US, Europe, the Americas and certain Asia markets, including China, which more than offset lingering pandemic-related headwinds in Australia and Japan. Its adjusted gross margin was 38.4%, decreasing by 195 bps compared to last year’s 40.3%—driven by increased expedite costs. The company obtained significant new retail space and decided to expedite additional product to ensure arrival in time for space sets at retail partners. By segment, innerwear sales increased by 3.0% year over year, excluding PPE. Management stated that innerwear growth was mainly driven by increasing unit volumes. Activewear sales grew 11.0% year over year, driven by strong POS trends across its activewear brands. Champion sales increased by 21.0%. In terms of geography, international sales increased by 4.0%. Inventory at the end of its fiscal year 2021 was $1.6 billion, an increase of 16.0% year over year, due to the combination of higher levels of in-transits and the strategic decision to invest in inventory in the quarter to capture increased consumer demand.
Looking Forward	For its first quarter of 2022, Hanesbrands expects net sales between $1.51 billion and $1.57 billion. At the midpoint, this represents around 2.0% growth year over year. Adjusted EPS is expected to be in the range of $0.24–$0.31. For the full year 2022, the company expects net sales of around $7.0–$7.15 billion. At the midpoint, this represents around 4.0% growth year over year. Adjusted EPS is expected to be in the range of $1.64–$1.81. The company raised its 2024 full-year potential revenue targets to around $8 billion compared to its prior goal of $7.4 billion. The company also made the decision to sell its US Sheer Hosiery business, focusing its portfolio on areas with the greatest potential for growth and returns.

Levi Strauss & Co (NYSE: LEVI) 4Q21
Details	Levi’s reported revenue growth of 22.0% year over year or 7.0% versus the corresponding quarter in 2019. Adjusted EPS increased by 105.0% year over year and up 58.0% on a two-year basis. Direct-to-consumer (DTC) net revenues increased by 25.0%, driven by growth in company-operated stores and e-commerce, which grew 28.0% and 22.0%, respectively. As a percentage of fourth-quarter company net revenues, sales from DTC stores and e-commerce comprised 30% and 8%, respectively. By geography, Americas’ net revenues grew 12% on a constant-currency basis, driven by growth across all channels. Europe’s net revenues grew 3% and Asia’s net revenues declined 2% on a constant-currency basis. The company continues to increase its share in women’s jeans in the US and has achieved significant traction engaging Gen Z consumers through programs such as Levi’s SecondHand recommerce initiative wherein customers can drop off their used clothing at designated stores to receive gift cards for future purchases. Through the “Buy Better Wear Longer” campaign, the company raised awareness regarding the responsibility on the environmental impacts of apparel production and consumption and encouraged customers to wear each item longer. Looser fits continue to increase in penetration, representing roughly half of Levi’s women’s and men’s bottoms assortments. Levi’s is seeing growth in tops business, driven by solid performance in men’s wovens and sweatshirts and strong momentum across women’s wovens, dresses and outerwear.
Looking Forward	Levi’s expects its net revenues to grow 11.0%­­–13.0% in fiscal 2022 compared to fiscal 2021, reaching net revenues of $6.4–6.5 billion. The company expects to achieve an adjusted EPS of $1.50–1.56 in fiscal 2022, representing growth of 2.0%–6.1% year over year. Gross margin is expected to expand by around 15–30 basis points year over year. To drive e-commerce growth, the company has accelerated investments to evolve its distribution network with plans to open two new distribution centers in 2022. In 2021, the company successfully migrated its US West Coast e-commerce fulfillment to its owned and operated distribution center in Nevada and now has plans to build a new distribution center for digital on the East Coast. The company is also building a highly automated, highly sustainable, owned and operated omnichannel facility in Germany that will be operational by 2024.

NIKE (NYSE: NKE) 3Q22
Details	NIKE’s revenues increased by 5.0% year over year versus 1.0% growth in the prior quarter. NIKE Direct sales were up 15.0% year over year. Wholesale revenues declined by 1.0% year over year but increased by 1.0% on Gross margin increased by 10year over year to 46.6%, driven by margin expansion in the NIKE Direct business due to lower markdowns and higher mix of full-price sales, partially offset by increased freight and logistics costs. NIKE brand digital sales increased by 22.0% year over yea, driven by double-digit sales growth in North America, Asia Pacific and EMEA, partially offset by declines in Mainland China. In the third quarter, the company launched ZoomX Streakfly, its lightest road-racing shoe, which performed well, according to NIKE. The ZoomX Streakfly offers an engineered knit upper and responsive NIKE foam , all designed for increased speed inmiddle-distance running. Another running shoe, the Pegasus 38, a lightweight and durable trainer designed for everyday use, saw strong sell-through in the quarter, the company reported. In the third quarter, following the acquisition of RTFKT—a non-fungible token (NFT) studio that produces digital collectibles, including virtual sneakers—the company introduced the NIKE Virtual Studio division, which released the first official NIKE-branded NFT. NIKE-owned inventory increased by 22.0% versus the prior year, with in-transit inventory representing 65.0% of total inventory at the end of the quarter, as transit times are now more than six weeks longer than pre-pandemic levels and two weeks longer than the same period in the prior year.
Looking Forward	NIKE reiterated its prior sales growth guidance for fiscal 2022 and expects sales to grow by mid-single-digits year over year. Specifically, for the fourth quarter, in North America, NIKE expects a decline in revenue due to strong comparatives. In Mainland China, it expects to see The company expects its gross margin to expand by at least 150 bps year over year, as strong consumer demand continues to fuel high levels of full price realization, low markdown rates and low customer returns. Management stated that the benefits of strategic pricing expected in the fourth quarter are being partially offset by elevated product costs, primarily due to higher macro input costs, supply chain costs and strategic actions to expedite delivery of product in North America.

Ralph Lauren (NYSE: RL) 3Q22
Details	In the third quarter, Ralph Lauren’s revenue increased by 27.0% year over year. Comparable store sales increased by 34.0% and adjusted EPS increased by 76.0% on a reported basis. By geography, North America’s total revenues increased by 30.0% year over year and comparable store sales were up 38.0%, with a 40.0% increase in brick-and-mortar stores and a 32.0% increase in digital commerce. Europe’s revenues increased by 47.0% and comps grew 55.0%, with a 68.0% increase in brick-and-mortar stores and a 27.0% increase in digital commerce. In Asia, revenues grew 16.0% while comps increased by 14.0%, with 12.0% growth in brick-and-mortar stores and a 64.0% increase in digital commerce. The company continues to leverage the following strategies and highlighted some achievements during the quarter. Win Over a New Generation of Consumers: The company continued to fuel strong consumer engagement, through diverse content, and accelerate marketing investments. The company also continued expanding leadership into the metaverse. Energize Core Products and Accelerate Under-Developed Categories: The company delivered a compelling Fall assortment, successfully capturing consumer interest in post-pandemic dressing, blending casual comfort with elevated looks. Drive Targeted Expansion in Regions and Channels: The company delivered strong growth across every region in the quarter. Lead With Digital: Total Ralph Lauren digital ecosystem revenues grew more than 40%. Operate With Discipline to Fuel Growth: The company’s third-quarter adjusted operating margin expanded 260 bps year over year, to 15.9%, with continued gross margin expansion and operating expense leverage on stronger revenues, including increased marketing investments. Its adjusted gross margin was 66.0%, up 60 bps year over year, despite increased freight headwinds of around 150 bps. The company also made continued progress on environmental, social and governance issues—including launching its first product using Clarus, a first-to-market patented technology that uses high-performance recycled cotton, developed by the company’s partner, Natural Fiber Welding.
Looking Forward	For fiscal 2022, the company raised its outlook and now expects revenue growth of 39.0%–41.0% compared to its previous outlook of 34.0%–36.0%. The company now expects its operating margin to be around 13.0%, compared to the prior expectation of 12.0%–12.5%. The gross margin is expected to increase by 70–90 bps year over year, up from its prior outlook of 50–70 bps, representing 65.7%–65.9% growth—with stronger average unit retail (AUR) growth and a favorable product mix more than offsetting increased freight headwinds. For the fourth quarter of fiscal 2022, the company expects its revenues to increase by 17.0%–18.0%. The company continues to comment on the uncertain and evolving situation surrounding Covid-19 impacting the timing and path of recovery in its market—and the potential for further outbreaks or resurgences across various markets, alongside the potential global supply chain disruptions.

Skechers U.S.A., Inc. (NYSE: SKX) 4Q21
Details	Fourth-quarter Skechers sales increased by 24.4%, caused by a 9.8% increase in domestic sales and a 34.0% increase in international sales. Domestic and international sales growth was driven by increases in both wholesale and DTC, with the largest improvement in international wholesale. Improvements in domestic wholesale were the result of higher unit sales volume and higher average selling prices. International wholesale increases were driven by growth of 123.5% in distributor sales, 61.3% in Europe and 8.6% in China. Gross margin was 48.6%, a decrease of 30 bps from last year’s 48.9%, primarily driven by higher freight costs. The company is seeing strong consumer demand for the Skechers brand. Consumers continue to stay outdoors for exercise, dining and many other activities—and seek out Skechers for comfort, innovation, quality and style at a reasonable price, according to the company. E-commerce achieved double-digit growth for the quarter. Its DTC average selling price per unit increased by 25.0%, reflecting of the company’s less promotional stance, higher-priced products and continued strong demand for innovative features in its comfort technology. The company continued to invest in its DTC capabilities, upgrading its POS systems in North America and the UK. It is currently completing updates in Japan, with Europe to follow. The rollout of new e-commerce sites also continued in the fourth quarter, with the launch of new platforms in Austria, Germany, India and the UK. More markets are planned for 2022, including several in Europe, according to the company. Additionally, the company is finalizing plans to enter the metaverse, creating an entirely new opportunity for the Skechers brand.
Looking Forward	For the first quarter of 2022, the company believes it will achieve sales of $1.68–1.73 billion, representing growth of 17.5%–20.9% year over year, and diluted EPS of $0.70–$0.75, representing 11.1%–19.0% year-over-year growth. For the full year 2022, the company expects sales of $7.0–7.2 billion, representing growth of 11.1%–14.3% year over year. Diluted EPS is expected to be between $2.70 and $2.90, representing growth of (38.7)%–(42.9)%. Port congestion eased in January 2022 and more containers reached the company’s distribution centers. However, the company believes supply chain challenges will remain through the first half of 2022 and ease in the latter half of the year.

Under Armour (NYSE: UAA) 4Q21
Details	In 4Q21, Under Armour reported a 9.0% year-over-year increase in revenue—9.3% growth on a two-year basis (versus 4Q19). Adjusted EPS decreased by 83.5% year over year but increased by 133.3% on a two-year basis. By distribution channel, wholesale revenue increased by 16.0%, year over year. DTC revenue increased by 10.0% versus 4Q20, driven by a solid performance in the company’s owned and operated retail stores and 4.0% year-over-year growth in e-commerce (an increase of more than 30% on a two-year basis), with online sales representing 42.0% of the total DTC business during the quarter. By category, apparel revenue increased by 18.0%, year over year, driven by strength in the training and outdoor businesses; footwear revenue increased by 17.0%, driven by the running and training categories; accessories revenue decreased by 27.0% due to lower sales of sports masks compared to 4Q20. By geography, North America witnessed revenue growth of 15.0%, year over year, driven by growth in the wholesale and DTC businesses. International revenue increased by 3.0% versus 4Q20. Within the international business, EMEA’s revenue increased by 24.0% year over year, while the APAC region saw a decline in revenue of 6.0%, due to weak demand in the wholesale business, which more than offset DTC business growth. Latin America’s revenue declined by 22.0%, owing to changes in the company’s business model as the company transitioned certain countries in this region to a strategic distributor model. In North America, Under Armour will continue to focus on three fundamentals to boost sales: Create more compelling in-store experiences and deliver best-in-class service (both online and offline) Continue to establish a premium positioning in wholesale price through inventory management Investing more smartly in marketing In China, Under Armour noted that it will continue to invest in digital innovation, including working to deliver an improved end-to-end customer engagement platform and ensuring that store expansions are done at an appropriate pace. In 4Q21, gross margin was up 130 bps, year over year, to 50.7%, driven by benefits from favorable pricing related to sales and lower restructuring charges.
Looking Forward	Under Armour is changing its fiscal year end from December 31 to March 31. Following a three-month transition period (January 1 to March 31, 2022), the company’s fiscal 2023 will run from April 1, 2022, through March 31, 2023 (as such, there will be no fiscal 2022). Under Armour believes that this change will provide greater alignment with its business cycle and financial reporting. Under Armour now expects its revenue for the transition quarter to increase at a mid-single-digit rate (in percentage terms) compared to the previous expectation of a low-single-digit increase. This expectation includes around 10 percentage points of headwinds related to a reduction in the company’s spring/summer 2022 order book due to supply constraints associated with the impacts of Covid-19. In the transition quarter, Under Armour expects its gross margin to be down 200 bps to 48.0% compared to the year-ago period, due to higher freight expenses resulting from pandemic-related supply chain challenges. Under Armour expects supply chain challenges to continue into fiscal 2023—until longer-than-usual transit times, backlogs and congestion find balance, associated freight and logistics costs normalize and inbound shipping delays subside.

V.F. Corporation (NYSE: VFC) 3Q22
Details	The company’s revenue from continuing operations increased by 22.0% year over year and by 5.9% on a two-year basis. Adjusted EPS increased by 45.0% year over year and by 9.8% on a two-year basis. By segment, active’s revenue increased by 25.0% year over year, including an 8.0% increase in its brand Vans. Outdoor’s revenue increased by 23.0%, including a 28.0% increase in its brand The North Face. Work’s revenue increased by 6.0%, including a 4.0% increase in its Dickies brand. Within The North Face, the company continues to see broad-based growth across categories, with logowear, sportswear and snow sports all growing over 20.0% year over year. On-mountain products grew strongly, particularly in products offering key technologies. Off-mountain lifestyle products also showed solid ongoing momentum, with its brand SELF nearly growing over 60.0%.  Lifestyle footwear grew 30.0%. Vans increased by 8.0% year over year, representing modest growth compared to pre-pandemic levels. Apparel grew 29.0% year over year. The Supreme brand continues to see strong demand and sell-through, both online and in its stores. The brand delivered about $200 million in revenue in the quarter, despite closing doors globally at various stages due to pandemic surges. Timberland grew 11% year over year, led by a very strong sellout season. By geography, the Americas’ revenue increased by 18.0% year over year. International revenue increased by 19.0%. Within international, Europe revenue increased by 26.0% and Greater China revenue decreased by 6.0% year over year. By distribution channel, DTC revenue increased by 30.0% and digital revenue increased by 21.0%. VF’s total digital penetration was roughly 30.0% as compared to about 20.0% in same quarter of fiscal 2020, reflecting investments made in digital infrastructure and talent, enhanced merchandising capabilities and omnichannel services.
Looking Forward	The company expects its full-year fiscal 2022 revenue to be approximately $11.85 billion, reflecting growth of around 28.0% year over year, including an approximate $600 million contribution from Supreme. In the fourth quarter, the company expects revenue growth of 10.0% year over year. Full-year 2022 adjusted EPS guidance remains unchanged at around $3.20. The company expects the DTC ecosystem to deliver stronger margins, supported by the mix shift to digital, which the company believes will continue to be a structurally accretive profitability driver over the long term. Pandemic-related manufacturing capacity constraints have continued during the third quarter, although the situation has improved. Additionally, continued port congestion, equipment availability and other logistics challenges have contributed to ongoing product delays. VF is working with its suppliers to minimize disruption and is employing expedited freight as needed.

Apparel Specialty Retailers

Apparel specialists reported another strong quarter: American Eagle Outfitters and Urban Outfitters posted double-digit sales growth year over year, whereas Dick’s Sporting Goods, Foot Locker and Gap posted single-digit sales growth. Within apparel categories, athleisure, casualwear and intimates continued to perform strongly in the quarter.

American Eagle Outfitters (NYSE: AEO) 4Q21
Details	Total revenues increased by 14.7% year over year, decelerating from 23.5% in the prior quarter. Comparable sales increased by 14.8%. By banner, Aerie’s sales grew 27% year over year, on the top of 25% growth in 4Q20, and American Eagle’s sales increased by 11%, following a 9% decline last year. The company’s digital revenues declined by 3% year over year, against strong comparatives. On a two-year basis, total digital revenues grew 31%. The company’s gross margin contracted by 160 bps year over year to 32.4%, mainly caused by elevated freight costs amid Vietnam factory closings—but offset by strong product demand, higher full-priced sales, inventory optimization and lower promotions. Its operating margin was 5.3%, up from 0.3% in the year-ago quarter. Adjusted EPS declined by 10.3% year over year. The company continued to expand its Aerie banner, opening 43 new stores in the quarter and bringing its full-year new store openings to 95. Management stated that the company saw strong year-over-year growth across all product categories. President and Executive Creative Director Jennifer Foyle stated, “Demand was strong across core Aerie apparel and intimates as well as OFFLINE activewear, which is showing great momentum just one and a half years into the launch. We have this incredible opportunity in OFFLINE, rooted in leggings, which we’re going to continue to build on and grow.”
Looking Forward	For 2022, the company expects year-over-year revenue growth to be in the mid-teens and operating income to be $550–600 million, compared to $603 million in 2021. The company expects a decline in operating income in the first half of fiscal 2022, followed by a recovery in the second half as it cycles elevated air freight prices in the second half of 2021, caused by factory closures and inventory challenges.

Dick’s Sporting Goods (NYSE: DKS) 4Q21
Details	Total revenues increased by 7.3% year over year, a deceleration from 13.9% in the prior quarter. Total comps grew 5.9% year over year, on the top of a 19.3% increase in the same period last year, driven by strong growth in apparel and footwear, and sporting equipment categories, along with a 4.8% increase in average ticket and 1.1% growth in transactions. E-commerce penetration stood at 27.0%, down from 32.0% in 4Q20 but in line with 27.0% in 4Q19. Management stated that its private-label brands have become a significant source of growth. In 2021, the company reported that these brands, including CALIA, DSG and VRST, saw more than $1.7 billion in sales, comprising about 14.0% of Dick’s total revenues. These private labels represent the company’s largest brands in fitness, golf, team sports and outdoor equipment categories. The company’s adjusted EPS grew by 49.8% year over year, driven by strong sales and merchandise margin rate expansion. Executive Chairman Edward Stack stated, “2021 has been the most transformational year in our company’s history. Among our accomplishments, we drove strong growth in our core Dick’s business; launched Dick’s House of Sport, a completely new experiential destination that’s redefining sports retail; we reengineered Golf Galaxy and launched the Golf Galaxy Performance Center, a new immersive experience for golf enthusiasts of all levels; and finally, we unveiled Public Lands, a new omnichannel specialty concept, to better serve the outdoor athlete.” Furthermore, Dick’s noted that lifestyle trends beneficial to the company, including health and fitness, casualization of the workplace and greater participation in outdoor activities, remain elevated.
Looking Forward	For the full year 2022, Dick’s expects adjusted EPS to be down by 16.6%–25.5% year over year and comp sales to be (4.0)% to flat year over year. It plans to spend $400–425 million on capital expenditure on a gross basis in 2022, compared to $308 million capital expenditure in 2021.

Foot Locker (NYSE: FL) 4Q21
Details	Total revenues increased by 6.9% year over year, accelerating from 3.9% in the prior quarter. Comparable sales increased by 0.8% year over year. The company’s digital penetration stood at 21.6% at the end of 4Q21, compared to 27.4% in 2020 and 18.7% in 2019. The company’s gross margin declined by 10 bps year over year to 33.0%, due to occupancy deleveraging and higher supply chain costs. Foot Locker’s adjusted EPS increased by 7.7% year over year. During 4Q21, Foot Locker recorded substantial vendor diversity, with the majority of its top 20 vendors reporting gains in their respective categories—comp growth from non-NIKE vendors was over 30%. Management stated that the momentum of brands including Adidas, Crocs, New Balance, PUMA, Timberland and UGG during 2021 showcased the expanding breadth of its consumer sneaker offerings, covering athletic, outdoor and seasonal categories. Foot Locker continued to expand its apparel category. CEO Richard Johnson stated, “Our push into apparel continues to yield strong results, with the category growing 30% in the fourth quarter and reaching $1.4 billion in annual sales for the first time in the company’s history.”
Looking Forward	For fiscal 2022, Foot Locker expects total sales to be down 4%–6% and comparable sales to decline by 8%–10%. The company forecasts gross margin of 30.1%–30.3% and adjusted EPS of $4.30–$4.60, down 40.8%–44.7% year over year. In fiscal 2022, the company plans to open about 100 new stores, including 40 power and community stores, 27 WSS stores (a US-based apparel and footwear company acquired by Foot Locker in 2021) and nine Atmos stores (a Japan-based apparel and footwear company acquired in 2021), while closing a total of 190 stores. Foot Locker stated that it expects to increase WSS’s sales to $1 billion by 2024, supported by accelerated store openings and strong same-store sales growth. Foot Locker also expects to expand Atmos’s sales by about 50% annually to nearly $300 million by 2024, by expanding internationally and scaling up in the company’s existing markets.

Gap Inc. (NYSE: GPS) 4Q21
Details	Total revenues grew 2.0% year over year, compared to a 1.3% decline in the prior quarter. Comparable sales increased by 3.0% year over year. On a two-year basis, fourth-quarter sales declined by 3.0%, while comparable sales increased by 3.0%. By brand, Athleta’s sales increased by 52% on a two-year basis, Banana Republic’s sales declined by 11%, Gap’s sales decreased by 13%, and Old Navy’s sales rose by 2%. In terms of comps, Athleta reported a 42% increase versus 2019, Banana Republic reported a 2% decline, Gap saw an increase of 3% and Old Navy reported almost flat growth. Digital sales were up 44% on a two-year basis and represented 43% of the total business. The company’s adjusted operating margin stood at 0.4%, down 550 bps from 2019 levels. CEO Sonia Syngal stated, “With customers returning to pre-Covid-19 purchasing behaviors, we are pivoting to a more versatile fashion, offering on-trend product across a range of used occasions, while playing to our market leadership in Denim, Active, and Kids and Baby. We saw these trends play out in the rise of Old Navy’s classic workhorse staple, the pixie pants and Athleta’s bestselling elation tight, both now in flare-leg shape.”
Looking Forward	For fiscal 2022, Gap expects low-single-digit year-over-year sales growth and a mid-to-high-single-digit decline in first-quarter net sales. The company issued adjusted operating margin guidance of 6.0%–6.5% and forecasts adjusted EPS to be $1.85–$2.05. For fiscal 2022, Gap expects capital expenditure of about $700 million, primarily to support growth investments, including digital and supply chain capacity projects, along with investment in store growth for its Athleta and Old Navy banners. CFO Katrina Connell stated, “While we spent an estimated $430 million in air freight in fiscal 2021, we plan to spend about 20%–25% less in 2022. A little more than half of the full-year 2022 air expense is expected to be realized in Q1, as we sell through product we expedited for fourth- and first-quarter flows. Improvements we’ve made to our planning cycle, which we expect to fully come to bear in summer, should reduce air usage beginning in Q2 and through the back half of the year.”

Urban Outfitters (NasdaqGS: URBN) 3Q21
Details	Urban Outfitters reported a revenue increase of 22.4% year over year, accelerating from the previous quarter’s growth of 16.7%. Comparable sales increased by 14% year over year, in line with the prior quarter. By brand, Free People led the way, with comps of 49% year over year—followed by Anthropologie and Urban Outfitters, which posted comp growth of 14% and 3%, respectively. By segment, retail saw total sales growth of 15% year over year, while wholesale’s net sales declined by 22%. Gross margin declined by 97 bps year over year to 27.5%, decelerating from 34.5% in the prior quarter, primarily due to lower initial merchandise markups led by higher inbound transportation costs, and an increase in delivery and logistics expenses. The company’s adjusted EPS declined by 18% year over year, down from a 14.1% increase in the prior quarter. During the fourth quarter, the company witnessed strong demand across all categories, with women’s apparel and home furniture performing strongest. Urban Outfitters stated that demand for dresses and occasion wear is growing substantially as weddings and events are once again being planned.
Looking Forward	The company did not provide financial guidance, but management remains optimistic for the first quarter. CFO Melanie Marein-Efron stated, “Our URBN first-quarter-to-date comp sales rate is ahead of our fourth-quarter rate. We believe first-quarter total company sales could come in up mid-teens versus fiscal 2019 [prior to the pandemic]. We believe that the Retail segment’s sales could land in the mid- to high teens, while the Wholesale segment’s sales could be approximately flat.” Furthermore, the company stated that gross margins for the first quarter will be down by over 100 bps year over year, owing to ongoing supply chain challenges, which led to the increase in inbound product transportation costs.

Off-Price Retailers

Off-price retailers saw a solid quarter, with all covered companies posting strong double-digit sales growth year over year. The apparel and home categories continued to outperform other categories for these retailers.

Burlington Stores (NYSE: BURL) 4Q21
Details	Total revenues increased by 14.3% year over year, decelerating from 38.1% growth in the prior quarter. Adjusted EPS increased by 3.7% year over year. Comparable sales increased by 6.0% on a two-year basis. Management attributed the 6.0% comp slowdown to lower store traffic, late delivery of inventory and lower consumer spending per transaction. The gross margin rate declined by 270 bps year over year to 39.8%, due to higher supply chain costs, including freight expenses and product sourcing costs. The company stated that the impact of inflation is both an opportunity and a risk for off-price retailers. The risk is that consumers, particularly lower income consumers, may be more affected as stimulus payments have ended and essential prices of food and gas are rising; the opportunity is that higher inflation affects all consumers and management believes it will benefit from customers trading down, seeking value. At the end of the quarter, in-store inventories were down about 30% on a comp-store basis. Management stated that holiday-sensitive businesses, such as food, holiday decor, gifts and toys, missed critical receipts, which impacted its inventory. However, the company noted that supply chain disruptions have created a strong buying environment for off-price during the quarter. Reserve inventory, which the company holds back in anticipation that it will not be able to be sold, increased by 62.0% versus 2019. During the quarter, Burlington opened net eight new stores, bringing its store count at the end of 2021 to 840.
Looking Forward	The company did not provide financial guidance for fiscal 2022, due to the continued uncertainty surrounding the pace of consumer demand recovery and the ongoing Covid-19 pandemic; however, the company is projecting a mid-teen comp sales decline in 1Q22. Management stated that the off-price industry will continue to be reshaped by powerful consumer need for value, which should drive further significant growth and market share gains for the sector. Burlington plans to open 120 new stores during 2022, adding 90 net new stores to its fleet. The retailer expects that 80 of those stores will be in its smaller format, spanning 30,000 square foot or under. Over the next five years, 75.0% of the stores that Burlington opens will be in its small format. Management sees productivity gains with the smaller stores, which are easier to operate and more efficient—and also as an opportunity, as the company relocates existing stores to smaller formats.

Ross Stores (NasdaqGS: ROST) 4Q21
Details	Total sales increased by 18.1% year over year, decelerating from 22.0% in the prior quarter. The company’s comparable store sales increased by 9.0% on a two-year basis, driven by growth in average basket size, partially offset by a decline in transactions. Diluted EPS increased by 55.2% year over year. Children’s and men’s clothing were the company’s best-performing categories, while the Midwest and Southeast were the top-performing regions. Its operating margin was down 350 bps on a two-year basis to 9.8%, which the company attributed to an increase in domestic and ocean freight, higher wages and pandemic-related expenses. At quarter-end, inventories were up 23.0% on a two-year basis, caused by an increase in in-transit merchandise due to longer lead times from supply chain bottlenecks. Packaway merchandise, which includes apparel, represented 40.0% of total inventories compared to 46.0% for the same period in 2019. Management stated that there is sufficient merchandise availability in the market, and that it sees more opportunistic buys from closeouts going forward.
Looking Forward	For 1Q22, Ross forecasts comps to be (2.0)%–(4.0)% year over year, and EPS to be $0.93–$0.99, down 26.1%–30.6% year over year—as management expects larger headwinds from higher freight and wage costs in 2022. For fiscal 2022, the company expects year-over-year comps to be flat to up 3.0% and EPS to be $4.71–$5.12, representing growth of (3.3)%–5.1%, year over year. Ross expects total sales for fiscal 2022 to grow by 2.0%–6.0% year over year. The guidance reflects the company’s expectation for sales and profitability to improve as the year continues. Ross plans to return to its regular store opening cadence of 100 new store openings in 2022, comprising 75 Ross locations and 25 dd’s Discounts. The company also expects to close around 10 older stores.

The TJX Companies (NYSE: TJX) 4Q22
Details	The company’s total sales increased by 28.6% year over year and by 13.5% on a two-year basis. EPS increased by 188.7% year over year but declined by 3.7% on a two-year basis. The company’s overall open-only comp sales grew by 10.0% on a two-year basis, supported by strong holiday season in November and December, offsetting softer sales in January due to Covid-19 restrictions. By banner, Marmaxx (US Marshalls and US T.J. Maxx) comps increased by 10.0% on a two-year basis, HomeGoods comps increased significantly by 22.0%, TJX Canada comps increased by 1.0%; however, TJX International comps decreased by 2.0%, due to government-mandated shopping restrictions throughout the quarter in Europe and Australia. In the fourth quarter, the company saw a strong increase in its average basket across all divisions, as customers purchased more items per shop. The company also saw consistent strength across all major categories and geographic regions for HomeGoods and HomeSense. Total inventories were up 22.4% compared to fiscal 2020, due to higher in-transit inventory. Management stated that per store inventory levels improved sequentially and were up versus fiscal 2020. During the quarter, the company increased its store count by five for a total of 4,689 stores.
Looking Forward	For the first quarter of 2023, the company expects US comp store sales to be up 1.0%–3.0% year over year. It expects total sales to be $11.5–$11.7 billion, representing a growth of 13.9%–15.8% year over year, and its gross margin to be 8.1%–8.5%. However, the company expects elevated expense headwinds compared to fiscal 2022. The TJX Companies currently expects that the level of incremental freight expense in fiscal 2023 will be the highest in the first quarter, at around 220 bps. The company expects its diluted EPS to be in the range of $0.58–$0.61, representing growth of 31.8%–38.6% year over year. For the full fiscal year 2023, the company expects US comp store sales to be up 3.0%–4.0% year over year. It expects total sales to be $52.6–53.1 billion, representing growth of 8.2%–9.3% year over year. It forecasts its gross margin to be close to fiscal 2022’s adjusted gross margin of 9.6%. The company plans to add about 170 new stores in its fiscal year 2023, which will bring its year-end total to 4,850 stores, representing store growth of around 3.0%. The company plans to remodel 400-plus stores and relocate 50-plus stores during the year. In the long term, it plans to grow its current store base to 6,275 stores, adding 1,600 more stores.

Beauty Brands and Retailers

The beauty category continued to recover strongly, with all covered beauty brands and retailers posting strong double-digit year-over-year sales growth. By category, bath, fragrance, haircare and skincare trended best while demand for makeup picked up substantially—reflecting the continued progression toward recovery in Western markets and increased usage.

Bath & Body Works (NYSE: BBWI) 4Q21
Details	Bath & Body Works (formerly L Brands) reported sales growth of 11.4% year over year and 35.7% on a two-year basis. Adjusted EPS increased by 17.0% year over year and its company’s operating income increased by 1.2%. According to the company, its performance was driven by strong customer response to its merchandise assortment, solid vertically integrated supply chain and a growing loyal customer base. CEO Andrew Meslow stated, “We demonstrated agility to read, react and replan the business in the midst of strong customer demand while also experiencing inflationary pressures and production constraints. Our primarily North American, vertically integrated supply chain provides us agility, and we were able to present full merchandise assortments to our customers in all time frames. We had adjusted to continuous Covid-19 protocol changes to keep our associates and our customers safe. We started planning and constructing a new company-run fulfillment center to support the future growth of our digital business.”
Looking Forward	For the first quarter of fiscal 2022, Bath & Body Works is forecasting a low-to-mid-single-digit decrease in year-over-year sales and its EPS to be $0.47–$0.55, compared to $0.60 in 1Q21. For full year 2022, the company expects sales to be flat to up 4.0% year over year. EPS is expected to be in the range of $4.3–$4.7, compared to $4.5 in first quarter of 2021, representing growth of (4.4)%–4.4% year over year. Gross margin is expected to contract 300–400 bps from 49.0% in fiscal 2021, primarily reflecting contracting merchandise margins due to inflationary costs.

Coty (NYSE: COTY) 2Q22
Details	Coty reported a 12.0% year-over-year revenue increase, but a decline of 5.9% on a two-year basis. Comparable store sales increased by 13.0% year over year. Adjusted EPS increased by 30.8% year over year and by 240.0% on a two-year basis. By segment, prestige reported 12.0% year-over-year growth in both revenues and comparable store sales. Prestige fragrance sales continued to grow at a double-digit pace in the second quarter, with nearly all brands particularly Burberry, Chloe, Gucci and Hugo Boss. Prestige cosmetics sales nearly doubled in the first half of fiscal 2022, led by global momentum in and the continued expansion of Kylie Cosmetics. The consumer beauty segment saw 11.0% year-over-year sales growth and comparable store sales growth of 12.0% in the second quarter. By geography, the company saw growth across all regions and travel retail—with the US and China continuing to be standout performers. The Americas’ sales grew 9.0% year over year, supported by strength in Canada, Mexico and the US. Sales in Europe, the Middle East and Africa (EMEA) increased by 13.0% year over year, recording growth in all key markets, alongside local travel retail. Asia-Pacific sales increased by 16.0% year over year, . Adjusted gross margin increased by nearly 590 basis points year over year to 64.6% and 120 basis points from the last quarter. The increase was driven by a favorable product and category mix, pricing and higher absorption.
Looking Forward	For fiscal year 2022, Coty raised its comparable sales guidance, now expecting growth at the upper end of the previously guided 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 costs savings in its brands to maximize value and fuel sustained topline sales growth. Coty raised fiscal 2022 adjusted EPS guidance and now expects it to be between $0.22 and $0.26, up from previous guided range of $0.20–$0.2

Estée Lauder (NYSE: EL) 2Q22
Details	Estée Lauder reported a 14.2% year-over-year increase in net sales and organic net sales grew 11.0%. Net sales increased in every region and product category, reflecting early stages of recovery in brick-and-mortar retail stores, primarily in Western markets and strength in online. Adjusted EPS increased by 15.0%. The company’s operating income increased by 22.0% year over year and its operating margin rose by 160 bps to 25.9%. By geography, organic net sales in the Americas increased by 19.0% year over year as holiday shoppers return to brick-and-mortar retail. Online also grew solidly in the Americas, with online representing more than one-third of sales in the region. In Europe, the Middle East and Africa (EMEA), organic net sales increased by 13% as growth was diverse and broad-based. In Asia Pacific, organic net sales increased by 5.0% as most of the markets in the region grew, led by Mainland China and Australia. By category, fragrance’s organic net sales grew 30.0% year over year with double-digit growth in every region and across all brands that sell fragrances. Hair care’s organic net sales rose 18.0%, 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 the continued progression toward recovery in western markets and increased usage occasions. Skincare organic net sales grew 7.0% in every region, led by strong double-digit sales growth from Bobbi Brown, Clinique and La Mer.
Looking Forward	The company raised its sales guidance for the full year 2022. Organic net sales are forecasted to grow 10.0%–13.0%, up from the previous guidance of 9.0%–12.0%. Diluted EPS is expected to range between $7.43 and $7.58, compared to prior guidance of $7.23–$7.38. Inflation and transportation and procurement are expected to impact the company’s cost of goods in the second half. However, the benefit of pricing and cost-mitigation efforts are helping to offset some inflation impacts for the fiscal year, according to the company. For its third quarter, Estée Lauder projects 8.0%–10.0% organic net sales growth. The company stated that the net incremental sales from acquisitions, divestitures and brand closures are expected to add about 3 percentage points to reported growth.

L'Oréal S.A (ENXTPA: OR) H2 2021
Details	L’Oréal reported a 15.4% year-over-year increase in revenues and 13.5% growth on a two-year basis. EPS increased by 20.1% year over year and by 59.9% on a two-year basis. All divisions posted strong double-digit year-over-year. The professional products division recorded 18.5% year-over-year sales. Consumer products’ sales were up 10.0%. L’Oréal Luxe’s sales increased by 16.5% and active cosmetics’ sales grew 28.4%. By geography, North America witnessed very strong momentum throughout the year and recorded the strongest year-over-year sales growth of 25.1%. Europe saw sales growth of 11.5%, with strong growth in Italy, Russia, Spain and the UK. Sales in the South Asia Pacific, the Middle East, North Africa and Sub-Saharan Africa region were up by 14.2%, with strong performance in India, the Middle East and South Africa. Latin America saw 16.2% sales growth, which was broad-based across all countries, with the exception of Argentina. North Asia recorded year-over-year sales growth of 12.9%, led by Mainland China.
Looking Forward	L’Oréal did not provide specific guidance for 2022, but is optimistic stated that desire among the rising upper middle-class worldwide is still extremely strong. The company expects L’Oréal Luxe to outperform as it continues investing in the division, aiming to make the most desirable, creative and admired products, according to the company. The company stated that it aims for continuous investment in maintaining its digital edge, and that its brands are already exploring the new frontiers of gaming and the metaverse.

Ulta Beauty (NasdaqGS: ULTA) 4Q21
Details	Total revenues increased by 24.1% year over year, a deceleration from 28.6% in the prior quarter. Comp sales increased by 21.4% year over year, driven by EPS increased by 78.5% year over year. Gross margin increased by 250 basis points (bps) year over year to 37.6%, driven by leveraging fixed costs and a higher merchandise margin. By category, bath, fragrance, haircare, makeup and skincare all delivered strong double-digit comp growth year over year, which the company attributes to strong execution of holiday plans and inventory management. The company’s beauty services business accelerated in the quarter, increasing by more than 30.0% year over year, driven by growth in sales transactions. During the quarter, the company expanded its salon capacity to 100% in all its salons and Benefit Brow Bars, a brow shaping and waxing store. It also launched salon services such as Express Color and OLAPLEX Repair & Protect, which continue to bring in new members to Ulta Beauty salons, according to the company. During the quarter, the company launched four new brands such as prestige haircare brand OLAPLEX, makeup brand N°1 DE CHANEL, skincare brand Supergoop! and fragrance brand Billie Eilish. Management stated that the company has so far experienced a strong sales response for these new brands. The company opened six new stores, relocated three and remodeled one during the quarter.
Looking Forward	For fiscal 2022, Ulta Beauty expects sales of $9.05–9.15 billion, representing growth of 5.2%–6.5% year over year. It expects year-over-year comp sales growth of 3.0%–4.0% and operating margin of 13.7%–14.0% of sales versus 15.0% in fiscal 2021. The company expects diluted EPS of $18.20–$18.70, representing growth of 1.2%-4.0% year over year. In fiscal 2022, Ulta Beauty plans to open 50 new stores and remodel or relocate 35.

CPG

CPG companies witnessed a mixed recovery. In the latest quarter, Colgate-Palmolive, Kimberly-Clark and Procter & Gamble posted positive sales growth year over year, while Clorox and Herbalife Nutrition registered single-digit year-over-year sales declines.

Clorox Company (NYSE: CLX) 2Q22
Details	The company reported a net sales decline of 8.0% year over year but a 19.0% increase on a two-year stack, reflecting a 10-percentage-point decline in volume and two points of favorable price mix. Adjusted EPS declined by 72.0% year over year. Gross margin decreased by 1,240 bps to 33.0%, primarily driven by higher manufacturing and logistics costs and commodity costs. By segment, health and wellness’s net sales decreased by 21.0%, due to a decline of 18 percentage points in volume from lower shipments in cleaning and professional products, and three percentage points of unfavorable price mix. Household net sales increased by 3.0%, driven by five percentage points of favorable price mix and a two-percentage-point decline in volume from lower shipments in cat litter. Lifestyle net sales increases by 2.0%, driven by a one percentage point increase in volume and one percentage point of favorable price mix. International sales were flat due to eight percentage points of favorable price mix, a five-percentage-point decline in volume and three percentage points of unfavorable foreign exchange. Clorox stated that it has added Alaska Airlines to its out-of-home, multi-year partnerships. Under the terms of the alliance, Clorox will supply hand sanitizer and disinfecting wipes for most airports where the airline operates and all its lounges.
Looking Forward	Clorox raised its sales guidance for the full year 2022 and now expects a net sales decline of 1.0%–4.0%, increasing from its prior guidance of a 2.0%–6.0% decline. By the fourth quarter of fiscal 2022, the company expects sales growth to return to its long-term sales growth target of 3.0%–5.0%. For the full year 2022, the gross margin is expected to decline about 750 bps, primarily due to commodity and manufacturing and logistics costs, which were higher than previously anticipated—with the assumption of a return to gross margin expansion in the fourth quarter of fiscal 2022. Adjusted EPS is expected to be between $4.25 and $4.50, representing a decrease of 38%–41% year over year.

Colgate-Palmolive Company (NYSE: CL) 4Q21
Details	In the fourth quarter, Colgate-Palmolive reported organic sales growth of 3.0% year over year, driven by pet nutrition and oral care segments. EPS increased by 3.0% on a base-business basis. The company’s gross profit margin was down 300 bps in the quarter to 58.1%, due to a 670-bps headwind from raw materials offsetting 120 bps pricing benefit and 250 bps of favorable productivity. By geography, North America’s organic net sales decreased by 1.5% year over year as North America lapped high-single-digit growth in the prior year, with liquid hand soap providing a headwind of more than 3 percentage point in the quarter. Latin America’s organic net sales increased by 6.0%; Brazil led growth, with strong pricing and premium innovation across whitening and natural products. Europe’s organic net sales decreased by 3.5%, lapping 4.5% growth in in the prior year, with a 2.5% foreign-exchange headwind. Asia Pacific’s organic net sales grew 1.5%, with volume and pricing increasing slightly but a modest negative impact from foreign exchange. The company stated that its digital transformation is paying off, seeing e-commerce market shares growing in key markets and strong e-commerce sales growth across all categories, including pet nutrition and within personal care, premium skin.
Looking Forward	Colgate-Palmolive expects organic net sales growth in 2022 to be within the company’s long-term target range of 3.0%–5.0%, driven by continued growth in oral care and pet nutrition segments. It expects gross profit margin expansion and low-to-mid-single-digit EPS growth. The company plans to streamline its supply chain to reduce structural costs through its 2022 Global Productivity Initiative. The program aims to reallocate resources toward the company’s strategic priorities and faster growth businesses, as well as drive efficiencies in its operations. The company expects to see benefits from the program in the second half of 2022, accelerating into 2023.

Herbalife Nutrition Ltd. (NYSE: HLF) 4Q21
Details	Herbalife’s total sales decreased by 6.6% year over year, mainly due to strong comparatives. On a two-year stack, sales increased by 8.0%. Adjusted EPS decreased by 19.7% year over year and by 23.0% on a two-year stack. The gross margin for the fourth quarter was 77.5%, down 60 bps year over year, due to increased costs as supply chain challenges persisted. By geography, North America’s sales decreased by 2.6% year over year but increased by 29.0% on a two-year stack. EMEA’s sales decreased by 7.4% year over year but increased by 21.0% on a two-year basis. South and Central America’s sales decreased by 14.3% year over year, while Asia Pacific’s sales increased by 5.1% year over year, led by continued strength in India, which grew 33.0% year over year. During the quarter, the company opened a new facility in a suburb of Bangalore, spanning 150,000 square feet. The new center will allow the company to accommodate planned growth in India, and will be home to a new local product research and development facility designed to accelerate new product launches. It will also contain a quality-control lab, a distributor meeting facility and a global business services center.
Looking Forward	For full year 2022, the company expects sales growth to be in the range of flat to 6.0% year over year and adjusted EPS to be in the range of $4.25 to $4.75, down from $4.79 in 2021. For first quarter of 2022, Herbalife expects sales growth to decline by 4.0%–10.0% year over year; however, the company anticipates that the sales decline will ease in the second quarter of fiscal 2022. Herbalife expects adjusted EPS to be in the range of $0.8 to $1.0, compared to $1.42 in 1Q21.

Kimberly-Clark Corporation (NYSE: KMB) 4Q21
Details	Total revenues increased by 2.7% year over year, versus 7.0% growth in the prior quarter. Comparable sales increased by 3.0% year over year, driven by an increase in net selling price. Adjusted EPS decreased by 23.1% year over year. The company stated that the sales growth results were impacted by $530 million of higher input costs, led by an increase in pulp and polymer-based materials, distribution and energy costs. These factors escalated input costs and the company's ability to fully meet growing consumer demand. By region, North America’s comp sales were in-line with the year-ago quarter in the consumer products segment and increased by 2.0% year over year in the K-C professional (KCP) segment. Outside North America, comp sales increased by 8.0% in developing and emerging (D&E) markets and 2.0% in developed markets. By segment, personal care sales increased by 12.0% year over year, but consumer tissue sales decreased by 10.0% year over year. KCP sales increased by 2.0% year over year.
Looking Forward	For full year 2022, the company expects net sales growth to be 1.0%–2.0% year over year and comp growth to be 3.0%–4.0% year over year. Kimberly-Clark expects operating profits to be down low- to mid-single digit year over year. It expects EPS to be in the range of $5.60–$6.00, representing growth of 4.1%–11.5% year over year. Kimberly-Clark plans to spend $1.0–1.1 billion in capital expenditures in 2022. The company expects inflation and supply chain disruptions to persist in 2022. It anticipates that approximately half of the inflation for 2022 is expected to come from elevated costs of distribution and energy, with the rest attributed to raw material components, which will be led by polymer-based purchase materials (superabsorbent, nonwovens and pulp).

Procter & Gamble Company (NYSE: PG) 2Q22
Details	Procter & Gamble’s total revenues increased by 6.0% year over year, accelerating from 5.0% growth in the prior quarter. Comparable sales increased by 6.0% year over year, driven by an increase in shipment volumes. Adjusted EPS increased by 1.0% year over year. The company’s gross margin dropped down 400 bps year over year to 49.1%, due to high commodity costs and freight costs. Likewise, its operating margin went down 250 bps year over year to 24.7%. By segment, beauty’s comp sales increased by 2.0% year over year. Within the beauty segment, both skin and personal care and haircare comp sales increased by low-single-digits year over year. Grooming’s comp sales increased by 5.0% year over year. Within grooming, both shave care and appliances comp sales increased by mid-single-digits year over year. Health care’s comp sales increased by 8.0% year over year. Within health care, oral care comp sales increased by low-single-digit year over year and personal health comp sales increased by over 20.0% year over year, driven by an increase in respiratory products sales due to a more intense flu season. Fabric and home care comp sales increased by 8.0% year over year. Within this category, fabric care comps saw a double-digit increase, led by strong sales growth of unit dose detergents and fabric enhancers. Meanwhile, home care comp sales registered a low-single-digit increase. Baby, feminine and family care comp sales increased by 5.0% year over year; specifically, baby care comp sales saw a high-single-digit increase, feminine care comp sales increased by double-digits and family care comp sales were in-line with the prior year. By region, Europe comp sales increased by 5.0% year over year, Latin America comp sales increased by 15.0% year over year, Mainland China comp sales were in-line with prior year, and US comp sales increased by 9.0% year over year.
Looking Forward	The company raised its sales and comps guidance for fiscal 2022 and now expects sales growth in the range of 3.0%–4.0% year over year, up from 2.0%–4.0% in its prior guidance. It now expects comp growth of 4.0%–5.0% year over year, up from the prior guidance of 2.0%–4.0%. The company also reiterated its adjusted EPS growth of 3.0%–6.0% year over year. The company has announced price increases in each of its 10 product categories in the US in 2022, which include baby care, feminine care, adult incontinence, family care, home care, hair care, grooming, oral care, skincare, and mid-tier liquid and powder detergents. It began these increases by raising the prices of its fabric care portfolio on February 28 and will increase the prices of certain personal health care brands in mid-April.

Department Stores

Major department stores witnessed robust recovery in the latest quarter. Macy’s and Nordstrom reported strong double-digit sales growth year over year, while Kohl’s reported single-digit year-over-year sales growth. These department stores are seeing strong sales in various accessories, apparel and footwear categories, such as activewear, denim, fine jewelry and home decor.

Kohl’s (NYSE: KSS) 4Q21
Details	Total revenues increased by 5.8% year over year, versus 15.5% growth in the prior quarter. Adjusted EPS decreased by 1.0% year over year, and gross margin increased by 124 bps to 33.2%. Digital sales declined by 1% year over year, but increased by 21.0% on a two-year basis. Online sales accounted for 39.0% of the company’s total sales. By category, activewear continues to be a key growth driver of the company’s business, with sales increasing by more than 25.0% year over year. The company saw strong sales growth in men’s and children’s apparel, as well as in the footwear category. Women’s apparel sales growth was affected as its average inventory was down around 45.0% compared to 4Q19. Active national brands Adidas, Champion, NIKE and Under Armour all experienced exceptional sales growth. Additionally, national brands Hurley, Koolaburra by UGG, LEGO, Levi’s, Ninja and Vans also performed well in terms of sales. The shop-in-shop concept, Sephora at Kohl’s, drove significant beauty sales in its first holiday season during the quarter. The company witnessed increased levels of traffic and a mid-single-digit sales lift in the first 200 stores that opened Sephora at Kohl’s locations, compared to the balance of the chain. Additionally, over 25% of customers shopping at Sephora at Kohl’s are new to Kohl’s. Management stated that the company experienced significant additional inventory receipt delays during the quarter, and it was unable to fulfill all the customer demand during the holiday period. The company estimated that sales growth was impacted by around 400 bps due to supply chain disruption.
Looking Forward	For the full-year 2022, the company expects net sales to increase by 2.0%–3.0% year over year and its operating margin to be in the range of 7.2%–7.5%. Kohl’s expects EPS in the range of $7.00–$7.50, representing growth of (4.5)%–2.3% year over year. The company expects around $850 million in capital expenditures, including the expansion of Sephora at Kohl’s and store-refreshing activity. In 2022, Kohl’s plans to open 400 Sephora at Kohl’s locations and, in 2023, it plans to open another 250. The company also plans to expand clothing brand Eddie Bauer from its current 500 stores to all 1,162 Kohl’s locations by the end of 2022.

Macy’s (NYSE: M) 4Q21
Details	Macy’s reported total sales growth of 27.8% year over year—driven by strong November and December holiday sales that exceeded the company’s expectations, but offset by softer sales in January. On a two-year basis, sales increased by 3.4%. Comparable sales increased by 27.8% year over year and by 6.1% on a two-year basis. Adjusted EPS increased by 206.3% year over year and by 15.6% on a two-year basis. Gross margin for the quarter was 36.5%, up 280 bps from the fourth quarter of 2020 and down 30 bps from the fourth quarter of 2019. Digital sales increased by 12.0% year over year and by 36.0% on a two-year basis. Digital penetration was 39% of net sales, a five-percentage point decline from 4Q20, but a 10-percentage point improvement on a two-year basis. By banner, comp sales at Macy’s were up 27.8% year over year and increased by 5.2% on a two-year basis. Bloomingdale’s comp sales increased by 37.6% year over year and by 13.0% on a two-year basis, and Bluemercury comp sales were up 30.9% year over year and increased by 3.1% on a two-year basis. Trending categories at Macy’s included: Fragrances, fine jewelry, home decor, men’s outerwear, toys, sleepwear and watches. Luxury clothing was a strength at Bloomingdale’s, along with strong performances in fragrances, fine jewelry, handbags, home décor and men’s shoes. Inventory was up 16.0% year over year and down 16.0% on a two-year basis. The company attributed its inventory productivity improvements to scaling its data science into its working teams, which has improved its decision-making process. In the quarter, the company added 7.2 million new customers, an 11.0% improvement on a two-year basis, with 58.0% coming in through its digital platform. Around 30% of these new customers were dormant over the past 12 months and have now re-engaged. Management announced that it will not be separating its e-commerce business, which had been under review for several months.
Looking Forward	Macy’s anticipates positive momentum in 2022, supported by strong consumer demand as the job market improves and wages continue to rise. The company expects demand to increase particularly as people return to the office and events. At the same time the company expects macroeconomic challenges, such as inflation, supply chain pressures, labor shortages and new Covid-19 variants. For full fiscal 2022, the company anticipates sales growth to be flat to 1.0% year over year, digital sales penetration of around 37.0% and capital expenditures of around $1 billion. Macy’s forecasts its gross margin rate to be between 38.1% and 38.3%—slightly down from fiscal 2021, largely due to increased digital penetration and expected inflationary cost pressures. The company plans to open 10 off-mall locations in 2022, including a mix of Bloomies and Bloomingdale’s, Freestanding Backstage and Market by Macy’s. The company is expanding and relocating its distribution centers to support business growth and serve its growing customer base. For first quarter of fiscal 2022, the company expects net sales to be between $5.3 and $5.4 billion, representing growth of 12.8%–14.9% year over year. Diluted EPS is expected to be in the range of $0.77–$0.85, representing growth of 97.4%–117.9% year over year.

Nordstrom (NYSE: JWN) 4Q21
Details	Total revenues increased by 23.4% year over year, accelerating from 17.7% in the prior quarter. Gross merchandise value increased by 24.0% year over year, and EPS increased by 485.7%. By banner, Nordstrom’s net sales increased by 23.3% year over year and Nordstrom Rack’s net sales increased by 23.5%. Geographically, its Nordstrom banner in the Southern US—where 44.0% of the company’s stores are located—outperformed the Northern US markets by 7.0 percentage points. Suburban stores outperformed urban stores by 10 percentage points in terms of sales. Digital sales for the quarter declined by 1.0% year over year and represented 44.0% of total sales during the quarter. Gross margin increased by 500 bps year over year to 38.4%, due to improved merchandise margins from reduced markdowns, as well as increased leverage on buying and occupancy costs. Nordstrom expanded order pickup and ship-to-store to all Nordstrom Rack locations, with order pickup reaching 11.0% of Nordstrom.com sales in the quarter. Sales in activewear, beauty, designer, home and kid’s categories saw the strongest growth as compared to 4Q19. The home category saw a 52.0% increase in sales compared to 4Q19, and activewear was up 22.0%. Core categories in apparel and shoes, which collectively make up more than 70.0% of the company’s business, are recovering but are still lower than 2019 levels.
Looking Forward	For fiscal 2022, Nordstrom expects revenue growth of 5.0%–7.0% year over year and EPS of $3.15–$3.50, representing growth of 186.4%–218.2%. Management expects that wage growth and higher employment levels will support consumer spending in 2022. It continues to see progress as consumers return to travel, socializing and work.

E-Commerce Platforms

Overall, e-commerce players reported mixed sales recoveries in the quarter. All covered companies (except Qurate Retail) posted positive sales growth year over year. However, focusing on online retail-related metrics, Amazon continued to falter and Alibaba’s China commerce segment delivered slow growth.

Alibaba (NYSE: BABA) 3Q22
Details	Alibaba’s total sales increased by 10.0% year over year, driven by strong sales growth in its cloud segment, local consumer services and its international commerce segment. On a two-year basis, sales increased by 64.2%. Adjusted EPS declined by 23.0% year over year. The number of annual active consumers (AACs) in the company’s ecosystem reached around 1.28 billion globally, an increase of around 43 million. In China, AACs grew from 953 million to 979 million during the quarter, while AACs outside of China grew to 301 million, with a quarterly net increase of 16 million. By segment, sales from its China commerce segment—which includes retail businesses Alibaba Health, Freshippo, Sun Art, Taobao, Taobao Deals, Taocaicai, Tmall, Tmall Global and Tmall Supermarket, alongside wholesale business such as 1688.com—increased by 7.0% year over year. The segment was impacted, by slowing macroeconomic growth and increased e-commerce competition, according to the company. Physical goods GMV for Taobao and Tmall grew by a single-digit percentage, year-over-year, depressed by apparel and electronics growing more slowly than total GMV growth. We have observed for some months the more challenging China context in which Alibaba is operating and the weak growth in Chinese retail demand. International commerce sales increased by 18.0% year over year, driven by solid transaction growth from its Lazada and Alibaba.com businesses. Sales from local consumer service business increased strongly by 27.0% year over year, driven by growth in order volume of 22.0%. Sales from smart logistics network Cainiao increased by 23.0% 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 20.0% year over year, driven by robust growth from financial and telecommunications industries. Taocaicai, Alibaba’s community marketplace business, continued to penetrate in less developed areas and its gross merchandise value (GMV) increased by 30.0% quarter over quarter. Trendyol, the largest e-commerce platform in Turkey, delivered GMV growth of 49.0% year over year, while Singapore’s e-commerce platform, Lazada, delivered GMV of 52.0% year over year. Management stated that the development of the international commerce market will be based on a combination of local supply and cross-border supply. Taobao Deals, which operates with a manufacturer-to-consumer model, continued to provide consumers with more value-for-money products, driving rapid consumer growth. During the quarter, paid orders on Taobao Deals grew strongly at over 100.0% year over year.
Looking Forward	The company did not provide guidance; however, it expects China commerce GMV growth to remain resilient, despite a challenging macroenvironment. Alibaba expects revenue diversification to continue, with cloud and international commerce segments exhibiting strong growth. Taobao Deals and Taocaicai are also expected to narrow down losses in the coming quarters. Alibaba stated that it will continue its plan to build cloud and logistics infrastructure both in China and internationally in 2022.

Amazon (NasdaqGS: AMZN) 4Q21
Details	Amazon reported 9.4% year-over-year revenue growth. On a two-year basis, the company registered revenue growth of 57.1%. EPS increased by 96.9% year over year. Operating income decreased by 49.3% year over year to $3.5 billion. The company stated that global supply chain disruptions and inflation remain strong headwinds. In Amazon’s retail-related segments, online stores’ sales (representing first-party online sales) declined by 1.0% year over year (although segment sales were up 1% at constant currency), physical stores sales increased by 17.0% and third-party seller services sales increased by 11.0%. Amazon Web Services grew sales 40% while the company’s advertising business increased sales by 32% to $9.7 billion. The company stated that Amazon had its biggest-ever Black Friday to Cyber Monday holiday shopping weekend, with apparel, beauty, home and toys among the top-selling categories. During the holiday season, third-party sellers, most of which are small- and medium-sized businesses, achieved record worldwide sales in Amazon’s store. Over 130,000 third-party sellers worldwide exceed $100,000 in sales on Amazon and, between Black Friday and Christmas, US-based third-party sellers sold an average of 11,500 products per minute. Furthermore, Amazon India’s month-long Great Indian Festival sales event was the biggest shopping celebration ever for sellers and brand partners on Amazon.in, with nearly 30,000 sellers exceeding $100,000 in sales. During the quarter, the first Starbucks Pickup with Amazon Go store opened in New York, which allows customers to order Starbucks beverages and food products through the Starbucks app and pick up from the store—in one location and without having to wait in line to pay.
Looking Forward	The company expects its revenue in the first quarter of fiscal 2022 to be in the range of $112.0–117.0 billion, representing 3.0%–8.0% year-over-year growth, and anticipating an unfavorable impact from foreign exchange rates of around 150 bps. Operating income is expected to be $3.0–6.0 billion, representing a year-over-year decline of 32.6%–66.3%. Starbucks and Amazon Go plan to open two more stores in 2022, with the next location planned for The New York Times Building in New York City.

JD.com (NasdaqGS: JD) 4Q21
Details	Total revenues increased by 23.0% year over year, decelerating from 25.5% in the prior quarter. Adjusted EPS increased by 48.3% year over year. The company attributed revenue growth to increasing shopping frequency among its users and technology-driven improvements in efficiency. JD.com’s net product revenues increased by 22.0% year over year and net service revenues increased by 28.0% year over year. The company’s core business segment, JD Retail, delivered solid topline growth and healthy margin improvement as revenues increased by 21.0% year over year. By category, the company continues to see resilience in its electronics and home appliance category, which saw 22.0% revenue growth year over year. General merchandise revenues grew 23.0% year over year. Management said order volume in its supermarket category grew at a CAGR of 30.0% between 2019 and 2021. In the fourth quarter, the company’s marketplace and marketing revenues exceeded ¥20 billion ($3.15 billion) in a single quarter for the first time in its history, growing at 27.0% year over year. Logistics and other services revenues increased by 30.0% year over year. As of December 31, 2021, the number of annual active user accounts stood at 569.7 million, increasing by 20.7% year over year.
Looking Forward	JD.com did not provide financial guidance; however, the company stated that it remains mindful of near-term macroeconomic volatility. It aims to continue gaining market share via proactive sustainable and high-quality growth strategies, while simultaneously remaining on track improvement trajectory, according to the company.

Qurate Retail, Inc. (NasdaqGS: QRTE.A) 4Q21
Details	Qurate’s sales declined by 9.0% year over year, compared to a 7.0% decline in the prior quarter. Adjusted EPS declined by 75.0% year over year. By banner, QxH’s sales declined by 7.0% year over year, due to supply chain constraints and product scarcity for home and electronics. QVC international’s sales declined by 9.0%, due to supply chain constraints in Europe and low sales in beauty, electronics and home categories. Zulily’s sales declined by 30.0%, due to supply constraints. Cornerstone’s sales increased by 8.0%, driven by strong growth in its home brands (Ballard Design, Frontgate and Grandin Road) and increased demand for apparel and home products at Cornerstone’s clothing and home-furnishings brand Garnet Hill. The company saw 19.0% year-over-year growth in its fashion categories, which partially offset the weakness in home and electronics. Beauty returned to growth, increasing by 4.0% year over year—marking the first quarter of positive growth since 2Q20. According to the company, its fourth-quarter performance was impacted by three main factors: Temporary drivers, which included continued supply chain challenges, including missing key electronics product deliveries; the fire at its Rocky Mount, North Carolina, fulfillment center; and earlier-than-normal holiday shopping by consumers, alongside uncertainty around the Omicron variant and inflation Execution challenges faced by the company as it made merchandise choices that did not perform, particularly in electronics and home Longer-term macroeconomic headwinds faced by the company, including intensifying competition in terms of price and store-traffic growth
Looking Forward	The company did not provide guidance; however, management stated that it is still benefitting from a strong, free cash flow, despite navigating a challenging execution environment in 2022. The company plans to open three Cornerstone retail stores in the latter half of 2022.

Electronics Retailers

Best Buy reported sales and comps decline in low-single-digits, due to constrained inventory and a temporary reduction in store hours in January 2022 due to Omicron-related staff challenges.

Best Buy (NYSE: BBY) 4Q22
Details	Total revenues decreased by 3.4% year over year, down from 0.5% growth in the prior quarter. Adjusted EPS decreased by 21.6% year over year. Comparable sales decreased by 2.3% year over year, with domestic comparable sales declining by 2.1% and international comparable sales declining by 3.8%. The company stated that 4Q22 sales were impacted by constrained inventory, including high-demand holiday items, and a temporary reduction in store hours in January 2022 due to Omicron-related staff challenges. Domestic sales decreased by 2.6% year over year, due to loss of revenue from permanent store closures in 2021 and a comp decline in gaming, mobile phones, tablets and services—but offset by compThe gross profit rate was 20.0%, a slight decrease from 20.7% in the same period International sales decreased by 10.7% year over year, due to the closure of its Mexico business and Canada’s comp decline of 3.8%. The gross profit rate was 22.9%, increasing from 20.8% same period last year.
Looking Forward	For fiscal 2023, Best Buy expects net sales of $49.3–50.8 billion, a decrease of 1.9%–4.8% year over year. It expects comp decline of 1.0%–4.0% year over year and operating income of 5.4%. It expects adjusted EPS to be $8.85–$9.15, down 8.6%–11.6% year over year.

Food, Drug and Mass Retailers: Discount Stores

Overall, discount stores continued to see strong trends, with Dollar Tree reporting mid-single-digit sales growth year over year and Dollar General reporting low-single-digit year-over-year sales growth against strong comparatives. However, Big Lots posted almost flat sales growth year over year. These discounters continued to expand their store estates in the fourth quarter.

Big Lots (NYSE: BIG) 4Q21
Details	Total sales decreased by 0.3% year over year, decelerating from 3.1% in the prior quarter. On a year-over-year basis, comparable sales declined by 2.3% while adjusted EPS declined by 32.0%. In terms of the company’s owned brands, Real Living continues its strong trajectory: Sales were up over 20.0% year over year. Similarly, Broyhill continues to grow strongly, having seen a sales increase of 7.0% year over year. Management stated that the company saw a strong holiday period, offset by soft sales in January due to inclement weather and the Omicron variant spike that caused a slowdown in the company’s business. The gross margin rate declined by 210 bps year over year to 37.3%, due to freight headwinds. The company opened 16 new stores and closed nine during the quarter, bringing its store count to 1,431 and its total selling space to 32.7 million square feet. At the end of 4Q21, inventory was 32.0% higher than 4Q20, due to significantly higher unit costs and a notable increase in in-transit inventory.
Looking Forward	For 1Q22, Big Lots expects diluted EPS in the range of $1.10–$1.20, down 54.2%–58.0% year over year. The company expects comp sales to decline by low double digits, year over year, as it cycles the impact of government stimulus in 1Q21. The company forecasts 130 bps of comp growth from net new and relocated stores in 1Q22, versus 1Q20, and a decrease in its gross margin rate of 50 bps. For fiscal 2022, the company expects comp sales and gross margin rate to be approximately flat compared to the prior year. It expects capital expenditure for fiscal 2022 to be between $210 million and $230 million, including investments in around 70 store openings, fewer than 10 of which will be relocations.

Dollar General (NasdaqGS: DLTR) 4Q21
Details	Total sales increased by 2.8% year over year versus 3.9% growth in the prior quarter. The company stated that the increase was driven by positive sales contributions from new stores, partially offset by the decline in same-store sales and the impact of store closures. Comparable sales declined by 1.4% year over year, due to a decrease in customer traffic. Diluted EPS declined by 1.9% year over year. Dollar General’s operating profit decreased by 8.7% year over year, due to The company’s nonconsumables initiative (NCI)—a new and expanded assortment in key nonconsumable categories including home, domestics, housewares, and party and occasion—Management stated it is seeing strong sales and margin performances across its NCI store base and that NCI stores outperformed non-NCI stores in both average ticket and customer traffic, driving an average incremental 2.5% total comp sales increase in NCI stores. During the quarter, the company opened 25 new Popshelf stores, increasing the total count to 55. 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. Merchandise inventories were $5.6 billion at the end of 2021, representing a year-over-year increase of 7.0% overall and 1.4% on a per-store basis.
Looking Forward	For fiscal 2022, Dollar General expects 10.0% revenue growth year over year and 2.5% comp growth year over year. The company expects diluted EPS growth to be 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. For the first quarter of fiscal 2022, the company expects comps to decline by 1.0%–2.0% year over year and diluted EPS to decline by 16.7%–20.2% year over year, due to elevated cost pressures and supply chain disruptions.

Dollar Tree (NasdaqGS: DLTR) 4Q21
Details	Dollar Tree reported a revenue increase of 4.6% year over year, accelerating from 3.9% growth in the prior quarter. Comparable sales increased by 2.5%. Diluted EPS decreased by 5.6%. The company’s gross margin was down 160 bps year over year to 30.2%, impacted by higher freight costs. Its operating margin was down 190 bps to 8.2%. By banner, Dollar Tree comp sales increased by 3.1% year over year, driven by an increase in average ticket. The banner’s strongest performing categories included candy, crafts, Christmas seasonal, party celebrations and stationery. Family Dollar comp sales increased by 1.7% year over, driven by an increase in average ticket, and the strongest performing categories included candy, pet, and snack and beverage. The company’s Combo stores, launched in May 2021, performed well in 4Q21—the format allows customers to shop for all Family Dollar and Dollar Tree products in one “easy-to-shop” local store. Management stated that the stores are driving a material comp sales lift, increased productivity, higher gross margins and improved operating performance. During the quarter, Dollar Tree opened 174 new stores, expanded or relocated 24 stores and closed 65. Additionally, the company completed 23 Family Dollar store renovations. Retail selling square footage at quarter-end was around 128.9 million square feet.
Looking Forward	For fiscal 2022, Dollar Tree expects sales of $27.2–27.9 billion, representing 3.4%–6.1% sales growth, year over year. The company estimates EPS in the range of $7.6–$8.0, representing a growth of 31.0%–37.9%. It expects comp sales growth of low to mid-single digits. In fiscal 2022, the company plans to open 800 Family Dollar H2 stores across the nation and expands its $3 and $5-plus assortment to 1,500 Dollar Tree stores. For 1Q22, the company expects sales to be $6.6–6.8 billion, representing 1.9%–4.9% year-over-year sales growth. Dollar Tree estimates EPS in the range of $1.90–$2.10, representing growth of 18.8%–31.3%, year over year.

Food, Drug and Mass Retailers: Drugstores

Drugstore owners continued to report strong topline expansion, with CVS Health and Walgreens Boots Alliance posting positive sales growth year over year in the latest quarter, driven by increased pharmacy claims volumes and strong front-of-store sales—led by a rise in sales of over-the-counter Covid-19 test kits and related treatments.

CVS Health (NYSE: CVS) 4Q21
Details	CVS Health reported revenue growth of 10.1% year over year and 14.5% on a two-year basis. Its adjusted EPS was up by 52.3% year over year or by 14.5% on a two-year basis. By segment, health care benefits’ revenue increased by 10.1% year over year, driven by membership growth in the government services business, slightly offset by the repeal of the health insurer fee. Its pharmacy segment’s revenues increased by 8.2% year over year, which the company attributed to increased pharmacy claims volume, growth in specialty pharmacy and brand inflation, and was partially offset by the impact of continued client price improvements. Its retail business delivered strong results, witnessing a 12.7% year-over-year sales increase, driven by the administration of Covid-19 vaccines and testing, and strong front store sales, including demand for over-the-counter Covid-19 test kits and related treatment categories, alongside strong Covid-19-related prescription volume. CEO Karen Lynch stated, “We are progressing on optimizing our retail portfolio and pivoting our stores into three formats: primary care clinics, enhanced health hubs and traditional CVS Pharmacy locations. We are executing our plan to de-densify stores based on consumer health and buying needs, omnichannel preferences and shifts in the US population.” During the quarter, the company administered over eight million Covid-19 tests and more than 20 million Covid-19 vaccines nationwide. Adjusted operating income increased by 8.1% year over year, due to increased prescription and front store volume, the administration of Covid-19 vaccinations in the retail segment, and growth in specialty pharmacy in the pharmacy services segment.
Looking Forward	For the full year 2022, the company expects an adjusted of $8.1–$8.3, representing growth of (1.2)%–(3.7)% year over year. CVS revised down cash flow from operations guidance to $12.0–13.0 billion from its prior $12.5–13.0 billion. In 2022, the company expects vaccine volumes to decline by 70.0%–80.0% year over year and in-store diagnostic testing volumes to decline by 40.0%–50.0%. For over-the-counter test kits, the company expects modest full-year volume growth versus 2021.

Walgreens Boots Alliance (NasdaqGS: WBA) 1Q22
Details	Walgreens Boots Alliance reported revenue growth of 7.6% year over year on a constant-currency basis, reflecting solid growth in US retail market and substantial recovery in the international market. Adjusted EPS was up by 53.0% year over year on a constant-currency basis. By geography, US sales increased by 3.2% on a constant-currency basis. US adjusted gross profits increased by 12.3% as both pharmacy and retail segments sales grew strongly. US adjusted operating income increased by 46.3%. International sales increased by 34.2%. Within the international region, UK sales were up 13.4%, reflecting ongoing sales recovery in the UK market. Adjusted operating income for the international region was up 89.0% year over year, driven by higher sales and tight cost control. CEO Rosalind Brewer discussed some initiatives taken by the company during the quarter. Brewer said First, we are transforming and aligning the core business and building a pharmacy of the future that will enable and support its health care strategy. Second, we are building a platform of consumer-centric health care solutions, which we expect to fuel our next phase of growth. Third, we are refocusing our portfolio and optimizing capital allocation. Finally, we are building a diverse winning team that will underpin our strategic priorities. During the first quarter, Walgreens administered 15.6 million Covid-19 vaccinations in the US, up from 13.5 million vaccines in 4Q21.
Looking Forward	The company raised its full-year guidance for adjusted EPS and now expects it to grow by a low-single-digit percentage versus prior guidance of flat growth. Walgreens expects to administer 30 million Covid-19 vaccinations in fiscal 2022, 5 million higher than the previous guidance. In fiscal 2022, US adjusted operating income is expected to be flat to up slightly. International sales projections improved to 9.0%–11.0% growth compared to previous guidance of 8.0%–10.0% and adjusted operating income is expected to grow more than 50.0%.

Food, Drug and Mass Retailers: Food Retailers

Most food retailers continued to post positive sales growth, with Albertsons reporting high-single-digit year-over-year sales growth in its latest quarter, while Kroger reported low-single-digit year-over-year sales growth. However, Sprouts Farmers Market reported a high-single-digit sales decline year over year.

Albertsons Companies, Inc. (NYSE: ACI) 3Q21
Details	Total revenues, increased by 8.4% year over year, accelerated from 4.4% growth in the prior quarter. Comparable sales increased by 5.2% year over year. Digital sales increased by 9.0% year over year. Adjusted EPS increased by 19.7% year over year. The company’s gross margin dropped down 40 bps year over year to 28.9%, due to increased product costs driven by the inflationary environment and high supply chain costs. Membership in the Just for U Loyalty Program—a free customer loyalty program offered by the company that allows the participants to receive weekly personalized deals on groceries, earn points on all eligible purchases and redeem rewards for discounts on various products—increased by 17.0% year over year to 28 million members. Albertsons’ fresh department comp sales outpaced center store sales by 500 bps year over year, as the company automated the production planning and simplified tasks in its fresh departments, resulting in better quality, higher in-stock rates and more time for customer interactions. Albertsons’ nine owned brands Its ear to 25.1%, with the strongest performances in the floral, deli and foodservice departments. The company opened nine new stores and remodeled 146 during the third quarter.
Looking Forward	Albertsons raised its comp sales, EBIDTA and EPS guidance for fiscal 2022 and now expects comp sales growth in the range of (0.8)%–(1.2)% year over year compared to prior guidance of (2.5)%–(3.5)% and EBITDA in the range of $4.25–$4.30 billion compared to prior guidance of $3.95–$4.05 billion. It now expects an adjusted EPS of $2.90–$2.95 compared to prior guidance of $2.5-–$2.60. The company expects to spend $1.8–$1.9 billion in fiscal 2022, slightly lower than its prior guidance of $1.9–$2.0 billion, due to supply chain related constraints.

Kroger (NYSE: KR) 4Q21
Details	Total revenues, excluding fuel, increased by 3.7% year over year, accelerating from 2.9% growth in the prior quarter. Comparable store sales, excluding fuel, increased by 4.0% year over year. Adjusted EPS increased by 12.3% year over year. Digital sales increased by 105.0% on a two-year stack. The company continues to attract new customers to its digital platforms. During the quarter, the company saw in-store pickup and delivery of online orders increase by 25.0% compared to 3Q21. During 4Q21, the company’s fresh category outpaced total company comp sales, excluding fuel. Floral products, specialty cheese and sushi performed best in terms of sales. CEO William McMullen stated, “During the quarter, industry challenges continued within the supply chain and we remain confident in our ability to navigate these challenges. Within our supply chain, we continue to deploy a wide array of tools, including our owned and operated fleet. We are also partnering with our suppliers to improve product availability using the strength of our data science teams to provide insights that shorten lead times and optimize inventory flow across the extended supply chain. We continue to focus on expanding our transportation contracts and attracting carriers from outside our industry, which has kept product flowing predictably across our network.”
Looking Forward	For the full-year 2022, Kroger expects comp sales growth, excluding fuel, to be 2.0%–3.0% year over year. It expects adjusted EPS to be $3.75–$3.85, representing growth of 1.9%–4.6% year over year. In 1Q22 and 2Q22, the company expects comp sales growth, excluding fuel, to be above the midpoint of its 2.0%–3.0% range, and it expects continued heightened inflation. Kroger expects EPS growth to be 2.0%–5.0%, year over year, in 1Q22.

Sprouts Farmers Market, Inc. (NasdaqGS: SFM) 4Q21
Details	Total sales decreased by 7.0% year over year but increased by 9.0% on a two-year basis. The company’s comparable store sales decreased by 1.1% year over year but increased by 2.7% on a two-year basis. EPS decreased by 45.8% year over year but increased by 18.5% on a two-year basis. Gross margin was down 100 bps year over year to 35.7% but was up 135 bps on a two-year basis. In the fourth quarter, bakery, deli, grocery and vitamins segments delivered strong sales growth. Deli continues to show strength in prepared deli meals, grab-and-go, vegan options and sushi. In prepared foods, the company released new meals created by in-house chefs, such as keto-friendly Atlantic salmon with poblano crema and a whole line of faster meals using NEA chicken, grass-fed beef and other attribute-driven proteins. Bakery continues to grow year over year, supported by ongoing innovation and seasonal events. Vitamins benefited from immunity products, partnerships and innovative new items, while grocery benefited from a strong holiday program and innovation. During the quarter, the company opened eight new stores and spent $28 million in capital expenditures.
Looking Forward	For the full year 2022, the company expects sales growth between 4.0% and 6.0% year over year, with comp store sales growth of 0.0%–2.0% year over year. The company expects gross margin to be flat compared to 2021 and adjusted EPS to be in the range of $2.14 to $2.24, representing 1.9%–6.7% year-over-year growth. The company plans to open 15–20 new stores in 2022, less than the previous estimate of 25–30 stores due to the ongoing permitting and supply chain challenges associated with sourcing materials and equipment. For the full year 2022, capital expenditure is expected to be between $150 and $170 million, which includes the potential relocation of one of the company’s distribution centers to a larger facility. For the first quarter of fiscal 2022, the company expects comp store sales growth of 0.0%–2.0% year over year and adjusted EPS between $0.69 and $0.73, representing growth of 0.0%–4.3% year over year.

Food, Drug and Mass Retailers: Mass Merchandisers

Mass merchandisers witnessed positive sales growth against strong comparatives. Target reported high-single-digit sales growth year over year, while Walmart posted almost flat sales growth.

Target (NYSE: TGT) 4Q21
Details	Target’s total sales increased by 9.4% year over year, decelerating from 13.3% in the prior quarter. The company’s comparable sales increased by 8.9% year over year and comparable traffic grew 8.1%. Adjusted EPS increased by 19.5%. Digital sales increased by 9.2%. The company’s gross margin declined by 110 bps, year over year, to 25.7%, reflecting pressure from increased supply chain costs. Its operating income margin was 6.8%, increasing from 6.5% in the year-ago quarter. During the quarter, Target registered strong sales from its Ulta Beauty assortment in stores where the company has added shop-in-shop locations of the beauty retailer—and management stated that sales growth is proving to be incremental. Target stores with an Ulta Beauty shop-in-shop location registered mid-teens sales growth across the beauty category.
Looking Forward	For fiscal 2022, Target expects low-to-mid-single-digit sales growth, year over year, and adjusted EPS in the high single digits. It expects its operating margin to be over 8.0% and its capital expenditures to be $4–5 billion. The company expects that quarterly year-over-year operating profit performance will be variable during 2022 but will generally improve as the year progresses. Target expects its 1Q22 operating margin rate to be favorable in relation to historical performance but well below its 1Q21 rate of 9.8%.

Walmart (NYSE: WMT) 4Q22
Details	Walmart reported revenue growth of 0.5% year over year, negatively affected by $10.2 billion related to divestitures, as the company has undergone some major continental drift last year with strategic divestments in Argentina, Japan and the UK. On a two-year basis, revenue increased by 7.7%. Adjusted EPS increased by 10.1%, year over year, and by 10.9% on a two-year basis. Walmart’s US segment (excluding Sam’s Club) reported comp growth of 5.6% year over year, with the company claiming market share gains in grocery. Its e-commerce sales grew 1.0%, year over year—identical to the growth reported by Amazon for its Online Stores segment in its 4Q21 (at constant exchange rates, for the quarter ended December 31). Sam’s Club US posted comp growth (excluding fuel and tobacco) of 10.4%, year over year. Sam’s Club membership income increased by 9.1%, driven by an increase in membership, which reached a record high during the quarter. Walmart International (excluding divestitures in Walmart Argentina and UK grocery chain Asda) saw 9.8% sales growth, year over year. E-commerce sales increased by 21.0%, year over year. In 4Q21, the company’s adjusted operating income increased by 5.9%, year over year, negatively affected by around 60 bps due to divestitures in Walmart Argentina, UK grocery chain Asda and Japanese grocer Seiyu. During the quarter, inventory levels were up 26.0% globally and 28.0% in the US, year over year, due to higher cost of goods and higher in-transit shipments. In 4Q21, the company launched Walmart GoLocal, a last-mile delivery solution using crowdsourced platform Spark Driver to help businesses of all sizes reach more customers. As of the end of the quarter, Walmart has 1,000 GoLocal service pickup points and expects to have 5,000 by the end of 2022.
Looking Forward	For fiscal 2023, Walmart expects total sales to increase by 4.0%, year over year, with US comp sales growth (excluding fuel) of 1.0%–2.0% for 1Q23 and around 3.0% for the full fiscal year. The company expects adjusted EPS for fiscal 2023 to grow by 5.0%–6.0%, year over year. The company expects full-year capital expenditure to be at the upper end of prior guidance of 2.5%–3.0% of sales, with a focus on supply chain, automation, customer-facing initiatives and technology.

Food, Drug and Mass Retailers: Warehouse Clubs

Warehouse clubs continued to perform strongly, with both BJ’s and Costco posting strong double-digit sales growth year over year. By category, grocery, home furnishings, jewelry and patio and garden saw strong sales growth in the quarter.

BJ’s Wholesale Club (NYSE: BJ) 4Q21
Details	Total sales increased by 10.4% year over year, decelerating from 16.2% growth in the prior quarter. Total comparable sales for the quarter increased by 8.8% year over year, excluding gasoline sales, and comp sales increased by 0.9% year over year. Adjusted EPS increased by 14.3% year over year. The company’s merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by 10 bps year over year. The company’s food business continued to perform very strongly, while sales of sundries and general merchandise lagged. Comp sales in grocery increased by 2.0% and its perishables and sundries division’s comp sales increased by 19.0% on a two-year stack. Delving deeper into the topline results, perishable and dry grocery items continuing to perform well, generating a 5% comp year over year and 23.0% on a two-year stack—but this strength was offset by weaker sales in sundries. During the quarter, the company launched ExpressPay across its stores, which enables customers to skip checkout lines using their phone. BJ’s Wholesale Club expects that ExpressPay will help the company in delivering a more convenient experience for its members in the long-term. In 4Q21, the company made two key investments, both in the logistics area: The company opened its fourth perishable distribution center in Kentucky. The facility is currently operated by food distribution company Burris Logistics, and will serve the company’s new markets in the Midwest. It will also take on some of its core market volume, allowing the company to better balance its facilities. The company announced that it will acquire all its perishable distribution centers from Burris Logistics.
Looking Forward	For the full-year 2022, the company expects a low-single-digit year-over-year increase in merchandise comp sales and a mid-single-digit increase in total sales, year over year. It expects membership fee income to grow by mid-single digits and merchandise margins and EPS to be flat, year over year. The company expects to open 11 clubs in 2022 in new and existing markets. The new markets are expected to include Columbus, Indianapolis and Nashville, and it will expand in its existing markets of Atlanta, Detroit, Miami, New York Metro, Orlando and Richmond.

Costco (NasdaqGS: COST) 2Q22
Details	Costco’s total sales increased by 16.1% year over year, slightly decelerating from 16.7% growth in the prior quarter. EPS increased by 36.4% year over year. Total comparable sales, excluding fuel, increased by 11.1% year over year and US comparable sales, excluding fuel, increased by 11.3% year over year. Canada comp sales, excluding fuel, increased by 12.4% and other international comp sales increased by 9.0% year over year. The company noted that traffic (or shopping frequency) increased by 9.3% at its stores worldwide and was up 8.3% year over year in the US. The average transaction or ticket was up 4.6% worldwide and up 6.9% in the US. Membership fee income increased by 9.8% year over year. In terms of membership renewal rate, the US and Canada’s stood at 92.0%, up 0.4 percentage points, sequentially. The worldwide renewal rate came in at 89.6%, up 0.6% sequentially. E-commerce sales, excluding foreign-currency impact, increased by 12.6% year over year. In e-commerce, stronger performing departments were home furnishings, jewelry, patio and garden, special or kiosk items, and tires. The company’s gross margin for the first quarter, excluding gas inflation, increased by 6.0 bps, year over year. During 2Q22, Costco opened five new warehouses, one each in China, France, Mexico, Spain and the US (in Florida).
Looking Forward	For fiscal 2022, Costco plans to open 32 new warehouses, four of which will be relocations, replacing existing units with larger and better-located facilities. The company estimates its full-year capex spend to be about $4.0 billion.

Home and Home-Improvement Retailers

Home and home-improvement retailers continued to see strong demand for their products in the latest quarter, with all covered retailers (except Wayfair) reporting positive sales growth year over year.

Floor & Decor Holdings, Inc. (NYSE: FND) 4Q21
Details	Total sales increased by 26.4% year over year and by 73.5% on a two-year basis. The company’s comparable store sales increased by 14.0% year over year. Adjusted EPS decreased by 6.4% year over year but increased by 69.2% on a two-year basis. Operating income decreased by 10.2% year over year and its operating margin was down 270 bps year over year to 6.7%. The company’s e-commerce sales increased by 45.1% year over year. It saw an increase in its e-commerce sales penetration rate of 190 bps to 16.4% year over year. In the fourth quarter, the company’s ocean freight costs, which represent its highest supply chain cost, more than doubled from its 2020 level. Given that ocean capacity constraints are driving higher container rates and demurrage and detention costs, the company expects higher ocean freight costs throughout 2022. CEO Thomas Taylor stated, “Our supply chain teams continue to work aggressively to secure international ocean carrier capacity to meet our strong demand. To do so, we have added significantly more capacity to our ocean and North American logistics, particularly from Asia, Brazil and Europe. Consequently, our in-stocks continue to trend in the right direction, supporting our strong sales growth.” The company opened seven new warehouse stores during the fourth quarter, ending the quarter with 160 warehouse stores and two design studios.
Looking Forward	For fiscal 2022, the company expects sales to be $4.3–4.4 billion, representing growth of 26.5%–29.4% year over year, and comp sales growth to be 10.5%–13.0% year over year. Floor & Decor expects diluted EPS to be $2.75–$3.00, representing growth of 12.7%–23.0% year over year, and its gross margin to be around 39.5% to slightly above 40%. Floor & Decor plans to open 32 new warehouse-format stores and four small design studios in 2022. It expects about 56.0% of the store openings to be in existing markets and 44.0% in new markets. The company expects capital expenditure to be $550–$590 million in 2022.

Home Depot (NYSE: HD) 4Q21
Details	Home Depot’s total sales increased by 10.7% year over year and by 38.4% on a two-year basis. The company’s comparable sales increased by 8.1% year over year, with US comps of 7.6%. EPS increased by 21.1% year over year and by 40.8% on a two-year basis. During the fourth quarter, all Home Depot’s regions and merchandise departments posted positive comps year over year. Departments of comps above the company average were building materials, décor, electrical, millwork, paint, plumbing and storage. The company’s kitchen bath department comp sales were in line with the company average, and appliances, flooring, hardware tools, garden and lumber departments were positive, but below the company average. In the fourth quarter, gross margin was down 35 bps year over year to 33.2% due to investments in supply chain network. Operating margin was 13.5%, an increase of 80 bps year over year. The company saw continuous strength in its both pro and DIY during the quarter, and pro sales growth continues to outpace DIY growth. On a two-year basis, sales grew strongly by double-digit for both pro and DIY customers. By geography, all 19 US regions posted positive year-over-year comps. Both Canada and Mexico posted double-digit positive comps, as the company managed industry-wide supply chain disruptions, inflation and a tight labor market efficiently. On a comparable basis, the average ticket increased by 12.3% year over year, mainly due to inflation across several product categories.
Looking Forward	The company expects sales growth and comp store sales growth to be slightly positive for fiscal 2022 and its operating margin to be flat versus fiscal 2021. Home Depot expects year-over-year EPS growth to be a low-single-digit percentage. Home Depot plans to invest around $3 billion in the company in the form of capital expenditures in fiscal 2022.

Lowe’s (NYSE: LOW) 4Q21
Details	Total sales increased by 4.9% year over year or by 32.9% on a two-year basis. EPS increased by 34.0% year over year. The company’s comparable sales increased by 5.0% year over year and by 34.5% on a two-year basis. US comparable sales increased by 5.1% year over year and grew 35.2% on a two-year basis. Gross margin was 32.9%, up 115 bps year over year. On Lowes.com, sales grew 11.5% year over year, which represents a two-year comp of 147.0% and around 11.0% sales penetration. The company completed the conversion of its third geographic area, the Carolina region, to the market-based delivery model for big and bulky products, which are now delivered directly to customers’ homes, bypassing stores altogether. The conversion in Carolina follows successful implementations in Florida and Ohio Valley regions. The company’s three merchandising divisions all posted positive comps year over year with strong growth across pro and DIY customers. Growth was well balanced with 12 of 15 merchandising departments posting positive comps and was broad-based on a two-year basis with all 15 departments up more than 18.0%. In pro, the company delivered growth of 23.0% year over year and 54.0% on a two-year basis. Within home decor merchandising division, flooring and appliances delivered the strongest comps in the quarter. Within hardlines, the company performed well during the holiday season as customers were active early and shopped often in its trim and tree category. In its building products division, comps were very strong, driven by broad-based balanced growth across building materials, electrical, lumber, millwork and rough plumbing.
Looking Forward	For the full year 2022, the company raised sales, EPS and operating margin guidance. It now expects sales to be in the range of $97–99 billion, a $2 billion improvement from the higher end of its prior forecast, with comp sales either falling or rising by 1.0% year over year. It forecasts diluted EPS to be in the range of $13.1–$13.6, up from prior range of $12.3–$13.0 and operating margin to be in the range of 12.8%-13.0% up from prior range of 12.5%–12.8%. The company expects capital expenditures of around $2 billion for the full year 2022 and gross margin is expected to be up slightly compared to the prior year.

Tractor Supply Company (NasdaqGS: TSCO) 4Q21
Details	Tractor Supply Company reported a 15.3% year-over-year increase in revenue, or a 51.6% increase on a two-year basis. Adjusted EPS increased by 17.7% year over year or by 59.5% on a two-year basis. Comparable sales increased by 12.7% year over year, driven by a 10.3% increase in average tickets and 2.4% growth in transactions. Gross profit increased 12.6% year over year and gross margin rate declined to 33.8% compared to 34.6% last year, driven by higher product cost inflation and inflated transportation costs. Adjusted operating profits increased by 13.4% year over year. President & CEO Harry Lawton said The strength in our customer base is supporting our market share gains across our categories. Our Neighbor’s Club program is growing with membership up 24% year-over-year as we transition from an affinity program to a tier rewards program. We have robust retention rates and engagement, especially with our highest value tier members. The company opened 36 new Tractor Supply stores and one new Petsense store in the fourth quarter.
Looking Forward	Tractor Supply Company expects fiscal 2022 net sales to be between $13.6 and $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%. The company expects its operating margin to be between 10.1% and 10.3% and EPS between $9.20 and $9.50, representing growth of 6.9%–10.3% compared to fiscal 2021. Tractor Supply anticipates comps to be flat to slightly positive in 1Q22. Fiscal 2022 consists of 53 weeks, one week more than fiscal 2021. The benefit of the 53rd week is anticipated to be worth around 1.5 percentage points of net sales and $0.15 contribution to EPS in fiscal 2022, according to the company’s estimates. In the long term, from fiscal 2022 to fiscal 2026, the company expects net sales growth between 6.0%–7.0% with comp sales growth between 4.0% and 5.0% and operating margin growth between 10.1% and 10.6%. In fiscal 2022, Tractor Supply plans to open around 75–80 new stores, remodel more than 150 stores and transform the side lots in around 100 locations along with opening 10 new Petsense stores.

Wayfair (NYSE: W) 4Q21
Details	Wayfair reported an 11.4% decline in revenues year over year, adversely affected by pronounced supply chain challenges in this quarter. On a two-year basis, revenues were up 28.5%. For the fourth quarter, its gross margin was down 190 bps to 27.2% year over year. The company noted that lower year-over-year volumes as well as inflation, driven by supply chain bottlenecks and a tight labor market, remain pressure points on its gross margin line. By geography, US net revenue declined by 8.8% year over year while international net revenue declined by 23.0%. During the quarter, the total number of orders delivered was down 26.7% year over year and active customers declined by 12.5% year over year; however, net revenue per active customer was increased by 10.6% year over year. Management stated that the macroenvironment remains dynamic and extremely difficult to read. Although household savings remain robust, customers are seeing widespread inflation impact their lives and pressure their wallets. As pandemic restrictions ease, they also have a larger range of choices for spending.
Looking Forward	Wayfair did not provide financial guidance. However, for the first quarter of fiscal 2022, the company expects its gross margin to be 27.0%–28.0% and capital expenditure to be $95–$105 million. Wayfair announced that it has partnered with Capital One Trade Credit to begin offering a Wayfair professional credit card with rewards for business shoppers, and a Wayfair professional flex account with flexible payment terms—both of which the company expects to roll out later in 2022. Customers will be able to apply using their business credentials to build credit. The company has built a suite of business-specific features, like tracking spend by customer or project, and provisioning account access for multiple employees.

Williams-Sonoma (NYSE: WSM) 4Q21
Details	Williams-Sonoma's total revenues increased by 9.1% year over year versus 16.0% growth in the prior quarter. Adjusted EPS increased by 37.0% year over year. The company’s comp sales grew 10.8% year over year. The company’s gross margin expanded by 290 bps year over year to 45.0%, driven by high merchandise margins and an occupancy cost leverage of about 20 bps. By brand, West Elm comp sales increased by 18.3% year over year, wherein, the company bedroom, dining, storage and occasional categories. Pottery Barn’s comp sales increased by 16.2% year over year, driven by strong core franchises in key categories; however, Pottery Barn Kids and Teens saw comp sales decline by 6.1% year over year, due to supply chain disruptions and a factory shutdown in Vietnam. comp sales increased by 4.5% on top of 26.2% comps last year. Merchandise inventories increased by 24.0% year over year, while inventory on hand increased by 14.8% year over year. However, management stated that the company’s inventory levels are still not aligned with demand and are below optimal levels, though Williams-Sonoma expects to return to more normalized inventory levels by the latter half of 2022.
Looking Forward	For fiscal 2022 and beyond, the company reiterated its guidance of comp sales growth in the mid- to high-single-digits with operating margins relatively in line with fiscal 2021. It expects revenues to reach $10 billion by 2024. Williams-Sonoma plans to spend $350 million in capital expenditures, with over 80% of the spend prioritized on technology and supply chain initiatives to support e-commerce business.

Jewelry Retailers

Signet Jewelers posted solid double-digit year-over-year sales growth in its latest quarter. For fiscal 2023, the company expects low to mid-single digit sales and EPS growth year over year.

Signet Jewelers Limited (NYSE: SIG) 4Q22
Details	Signet Jewelers Limited total revenues increased by 28.6% year over year versus 18.3% growth in the prior quarter. Comparable sales increased by 23.8% year over year and adjusted EPS increased by 20.7% year over year. The company’s brick and mortar sales increased by 34.6% year over year and e-commerce sales increased by 8.7% year over year. Signet’s gross margin was up 120 bps year over year to 41.0%, led by the continued leverage on fixed costs from the company By region, North America’s sales increased by 26.9% year over year, wherein brick and mortar sales increased by 30.6% year over year and e-commerce sales increased by 14.0%. Its comp sales increased by 22.2% year over year. International sales increased by 49.0% year over year, with brick-and-mortar sales increasing by 124.9% year over year, but e-commerce sales declining by 30.8%. International comp sales increased by 50.2% year over year. Management stated that the company’s largest banner, Kay, had an inventory turn of around 2x, the fastest in its history. Furthermore, management commented that Jared's average transaction value (ATV) increased by over 60.0% compared to the previous year. The company also noted that James Allen’s fashion category sales increased by more than 95.0%, with an ATV more than 8x the company’s North America average.
Looking Forward	For fiscal year 2023, the company expects revenue in the range of $8.03–$8.25 billion, representing growth of 2.9%–5.8% year over year and EPS of $12.28–$13.00, a growth of 0.5%–6.4% year over year. It expects an operating income of $921–$974 million for fiscal 2023. For first quarter of fiscal 2023, Signet expects revenue in the range of $1.78–$1.82 billion, representing growth of 4.7%–7.1% year over year and an operating income of $177–$186 million.

Luxury Companies

US-based luxury companies witnessed strong sales recoveries. In their latest quarter, both Capri Holdings and Tapestry posted double-digit sales growth year-over-year.

Capri Holdings (NYSE: CPRI) 3Q22
Details	In its third quarter, Capri Holdings posted a revenue increase of 24.0% year over year and 2.4% on a two-year basis. Management attributed the growth to better-than-anticipated results at all three brands: Versace, Jimmy Choo and Michael Kors. Gross profit expanded by 23.6% year over year while gross margin growth was flat versus the same period last year. The company remarked that greater-than-expected supply chain costs offset the benefits reaped from the company’s strategic initiatives. Operating margin was 20.6%, up from 12.8% in the prior year. By brand, Jimmy Choo performed strongest, with revenues up 47.0% year over year. Versace revenues increased by 29.0% year over year and Michael Kors grew 20.0%. By geography, management stated that the Americas’ performance exceeded expectations significantly, growing 26.0%—and, if not for constraints around inventory, growth may have been greater. In EMEA, revenues were up 35.0%, exceeding expectations despite restrictions in some countries; management called out domestic consumer demand as a growth driver, as international tourism has not yet recovered in the region. In Asia, revenues were up 3.0%. Revenue declined in Mainland China, due to store closures, travel restrictions and lockdowns in some cities, offsetting improving trends in Japan, Korea and Southeast Asia.
Looking Forward	For the full fiscal year 2022, the company raised sales and EPS guidance, now expecting sales of about $5.6 billion, an increase of 37.9% year over year from its prior guidance of $5.4 billion—reflecting the better-than-expected results in the third quarter. The company now expects an operating margin of 19.0%, an increase from the prior 18.0%, and diluted EPS of $6.00, versus the prior $5.30. For the fourth quarter, the company expects sales of around $1.4 billion, representing growth of 16.7% year over year and an operating margin of around 13.5%. Diluted EPS is expected to be around $0.80, representing growth of 166.1% year over year. The company also provided preliminary guidance for the fiscal year 2023, stating that it has considered the impact of the pandemic and ongoing supply chain challenges. It expects revenue growth of around 10.0% to $6.1 billion and an operating margin of about 19.0%, reflecting gross margin expansion of around 50 bps. It expects EPS to increase about 10.0% to $6.60.

Tapestry (NYSE: TPR) 2Q22
Details	Tapestry reported 27.0% year-over-year growth in its second quarter and 18.0% growth on a two-year basis, driven by strong performance for its brands Coach and Kate Spade. Adjusted EPS increased by 15.7% year over year. Digital sales jumped by 30.0% year over year and tripled compared to pre-pandemic levels. By brand, Stuart Weitzman’s revenues were up 37.0% year over year, but were flat comparing to pre-pandemic levels. Kate Spade’s revenues were up 33.0% and 16.0% on a two-year basis, while Coach revenues were up 24.0% year over year and 20.0% on a two-year basis. By geography, North America revenues were up 35.0% year over year and up 25.0% on a two-year basis. In Mainland China, sales were up in the mid-single digits year over year and over 35.0% compared to pre-pandemic levels. Gross margin declined by about 150 basis points year over year to 68.1%, due to higher freight costs resulting from supply chain disruptions. new customers during the quarter, with transactions taking place across channels in North America—a low double-digit increase compared to last year, with growth in both stores and online.
Looking Forward	Tapestry raised sales and EPS guidance for fiscal 2022. It now expects revenues to be $6.75 billion, an increase from the previous outlook of $6.6 billion, representing annual sales growth of 20.0% year over year. For fiscal 2022, the company now expects diluted EPS to come in at $3.60–$3.65, an increase from the previously guided $3.45–$3.50, representing year-over-year growth of 22.0%–23.7%. The company expects strong momentum in North America in the second half to be slightly offset by near-term pandemic-driven headwinds impacting sales in China.

Pet Care Retailers

Petco Health and Wellness Company reported strong double-digit year-over-year sales growth in its latest quarter. All categories and segments of Petco registered positive sales growth in the quarter.

Petco Health & Wellness Company, Inc. (NasdaqGS: WOOF) 4Q21
Details	Total revenues increased by 13.0% year over year, decelerating from 15.0% in the prior quarter. Comparable sales increased by 14.0% year over year. Adjusted EPS increased by 65.0% year over year. The company’s gross margin was down 59 bps year over year to 42.0%, due to supply chain headwinds. In the fourth quarter, the company added around 800,000 net new customers, bringing its total active customer count to 24.1 million at the end of 2021. The company’s digital revenue increased by 25.0% year over year or by 143.0% on a two-year basis. Petco has developed hich led to digital services bookings’ growth of over 75.0% year over year. By category, supplies and companion animal on a two-year basis. Services and other grew 31.0% year over year and by 64.0% on a two-year basis, benefiting from the expansion of the company’s membership and subscription programs. By segment, pharmacy registered sales growth of 66.0% year over year, with strong growth in both health-related Rx Food and pets’ prescription foods. Within pet care center merchandise, sales increased by 10.0% year over year.
Looking Forward	For full year 2022, the company expects sales growth of 6.0%–8.0% year over year and adjusted EPS growth of 6.6%–9.9% year over year. It expects adjusted EBITDA growth of 7.0%–9.0% year over year. Petco plans to spend $275–325 million in capital expenditures in 2022, which includes investments in digital platforms, the expansion of vet hospitals and enhanced supply chain capacity.

 

Looking Forward

Many retailers and brand owners saw a strong fourth quarter of 2021. However, in the coming months, Coresight Research expects retail to see headwinds from new lockdowns in China and the Ukraine-Russia conflict, both of which could worsen the supply chain crisis and product shortages. The Ukraine-Russia crisis could also lead to elevated transportation costs. Overall, apparel and footwear brand owners reported strong topline expansions. Likewise, apparel specialty retailers reported another robust quarter, with all covered retailers posting strong positive sales growth year over year. Within the sector, athleisure, casualwear and intimates categories continued to perform strongly in the latest quarter. Off-price retailers reported another solid quarter. The apparel and home categories continued to outperform others for these retailers, as consumers began to refresh their wardrobes and homes. These retailers also continued to expand their store real estate. However, supply chain pressures and higher freight costs remain headwinds going into 2022. Beauty retailers and brand owners continued to see solid growth in sales. Specifically, bath, fragrance, haircare and skincare are currently trending, while the demand for makeup is recovering substantially. CPG companies witnessed a mixed recovery in the latest quarter. Colgate-Palmolive, Kimberly-Clark and Procter & Gamble all posted positive sales growth year over year, while both Clorox and Herbalife Nutrition registered single-digit year-over-year sales declines. Major department stores witnessed robust recovery, with all covered companies reporting positive sales growth year over year. These department stores saw strong sales in various accessories, apparel and footwear categories, including activewear, denim, fine jewelry and home decor. E-commerce players saw mixed sales growth this quarter. All covered companies (except Qurate Retail) posted positive sales growth year over year. However, focusing on online retail-related metrics, Amazon’s online stores’ sales (first-party online sales) declined by 1.0% year over year and Alibaba’s China commerce segment registered slow growth. Both discounters and warehouse clubs reported strong topline growth and continue to expand their store real estate. Mass merchandisers witnessed positive sales growth against strong comparatives. For fiscal 2022, Target expects low-to-mid-single-digits sales growth year over year and Walmart expects sales growth around mid-single-digits year over year in fiscal 2023. Home and home-improvement retailers reported strong demand for their merchandise in the latest quarter, with all covered companies (except Wayfair) posting positive sales growth year over year. They also forecast a continued supportive environment for consumer spending on home-goods in the coming months. With elevated travel trends, US-based luxury companies witnessed strong sales recoveries. Both Capri Holdings and Tapestry, posted double-digit sales growth year over year.