Introduction

Our weekly Earnings Insights reports look at 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 Covid-19 pandemic on first-quarter 2021 performance (ended April 30, 2021 for most companies). Companies featured are those within our Coresight 100 coverage list. In this report, we mainly focus on those that reported in the week ended May 16, 2021; however, we have also included some companies reporting before this week, such as apparel and footwear company Under Armour and beauty company Estée Lauder, primarily to offer more comprehensive insights on their respective sectors. For most US retail companies, the quarter under review will be the first quarter of fiscal 2021 (1Q21), though some of the companies covered have different year ends (for example, Alibaba and Guess?). In February 2021, US retail sales saw strong growth of 7.2% year over year. Consumers continued to purchase goods rather than services but pulled back spending in a month that saw no stimulus checks and a nearly nationwide winter storm keep millions inside for almost one week. In March, US retail sales growth accelerated to 18.5%. Growth was inflated by low sales numbers in March 2020, when the Covid-19 pandemic first hit the US. However, even comparing sales to March 2019 paints a picture of strong sales growth in March 2021, with a two-year increase of 26.2%—up from the 15.8% two-year increase in February 2021. April’s year-over-year growth set a new high for retail sales growth since the start of the Covid-19 pandemic, in large part because of the very weak comparatives in April 2020 when the pandemic caused nationwide lockdowns and store closures in the US that resulted in a 4.9% year-over-year decline in retail sales that month. Comparing to 2019 values, April sales still grew by a very strong 22.2%. We assess the recent performance of selected retailers and brand owners below.

Apparel and Footwear Brand Owners

	Guess? Inc. (NYSE: GES) 4Q21
Commentary	Total sales increased 23% year over year but declined by 23% compared to 4Q19. Digital sales increased by 38%, both in North America and Europe. In the quarter, the company experienced disruption in its supply chain, both to sourcing and transportation. This caused delays in product deliveries globally, increased transportation costs and contributed to the company producing less promotional activity. The company believes that these delays will be normalized by the summer of 2021. Management stated that the company’s five-year strategic plan, first presented in 2019, continues to be a solid roadmap for revenue growth. The key strategic pillars include brand relevancy, customer centricity, organization and culture, product excellence, and expansion of global footprint and functional capabilities. Management stated that these strategic pillars remain at the core of the company’s strategy, and the company made strong progress across each during the pandemic in the reported fiscal year. The company feels confident in its business and believes that as the world emerges from the pandemic, consumers will be inspired to venture out and buy new clothes. Guess? believes that its product assortment is ideal for post-pandemic business, and casualization will stay. The company also noted that its assortment of dressier occasion apparel and accessories will resonate as consumers begin to socialize again.
Outlook	For 1Q22, the company expects revenues to be down in the high single digits year over year. It expects that pandemic-related shutdowns and traffic declines will be partially offset by continued growth momentum in its global e-commerce sales, as well as the favorable timing shift of European wholesale shipments from 4Q21 into 1Q22. For the full fiscal year 2022, the company expects revenues to be down in the high single digits against fiscal 2020, assuming there will be no Covid-related shutdowns after the first quarter. The full-year guidance also assumes a return to a normal pace of product development and shipments for its European wholesale business.
	Hanesbrands (NYSE: HBI) 1Q21
Commentary	Total sales increased by 25% year over year but declined by 5% compared to 1Q19. Growth was mainly driven by the global Champion brand and its US innerwear business. First-quarter sales growth also benefited from certain one-time contributions, including government stimulus checks and retail restocking. By segment, US innerwear sales increased by 35%, driven by point-of-sale growth. Activewear segment sales increased by 26%, driven by growth in the online channel, including Champion.com as well as pure-play and retail partner sites. International segment sales increased by 8%. The company reclassified its European innerwear business as a discontinued operation and recorded a non-cash charge of around $390 million. The company reiterated its “Full Potential” strategy, beginning in 2021 and focusing on four pillars: growing the Champion brand globally, re-igniting innerwear growth, driving consumer-centricity and focusing on its portfolio. Management stated that the following initiatives drive the strategy: winning with brands and products, supply chain segmentation, simplicity, technology modernization and a winning organization and culture.
Outlook	For fiscal 2021, the company expects net sales from continuing operations to total $6.20–6.30 billion, with a mid-point at $6.25 billion, implying approximately 2% year-over-year growth. Using the midpoint of the company’s 2021 net sales guidance as its base, Hanesbrands expects revenues to increase to approximately $7.4 billion by 2024, representing a CAGR of 6%. Hanesbrands expects to expand its operating margins to approximately 14.3% by 2024, compared to the midpoint of the company’s 2021 guidance of 13.3%.
	Levi Strauss & Co (NYSE: LEVI) 1Q21
Commentary	Total revenues were down 13% year over year and decreased by 9% compared to 1Q19. Digital net revenues grew by 41% year over year, with Levi’s e-commerce business grew 25% and contributed about 10% of total revenues. By geography, net revenues in the Americas declined by 14%; net revenues in Europe declined by 16%; and net revenues in Asia declined by 5%. The company sees consumers’ embracing the looser fit and wider silhouette and believes that these new silhouettes will give consumers a reason to buy Levi's. Management stated that the company continues to leverage its four-pillar strategy and that it did drive strong gross margins in 1Q21. The four-pillar strategy focuses on the following: 1. Leading with its brands: The company introduced new products such as women’s 501 crop and extended sizes, and new fashion fits targeted at Gen Z. 2. Acting DTC (direct to consumer) first: Although wholesale business is bouncing back for Levi’s, the company will continue to focus on DTC business. The company plans to increase the prices of products by 2–3% across US wholesale to generate a healthier wholesale mix (premium vs. mass). 3. Diversify its portfolio: Maintain its jeans market share leadership in the US and grow its share in women’s jeans in key markets in Europe such as France, Germany and Spain. 4. Digitally transform its business: The company is using its app to seamlessly connect the offline and online experience and is piloting new convenience-oriented in-store features such as self-checkout.
Outlook	For the first half of fiscal 2021, the company expects sales growth of 24–25% year over year. The company aspires to grow its digital sales to one-third of its business over time.
	Under Armour (NYSE: UAA) 1Q21
Commentary	Revenue was up 35% year over year and up 4.4% compared to 1Q19. By channel, wholesale revenue increased by 35% year over year, and DTC revenue increased by 54%, driven by 69% growth in e-commerce. By geography, North America revenue increased by 32%; international revenue increased by 58%. Within the international business, revenue increased by 41% in EMEA, grew 120% in Asia Pacific but decreased by 9% in Latin America. In North America, the company’s revenues were driven by focusing on tight inventory management, proactive demand constraints, improving segmentation and servicing customers well—in line with the company’s strategy to drive growth by strengthening its brand. By category, apparel revenue grew 35%, footwear revenue increased by 47%, and accessories revenue rose 73%. In terms of footwear products, HOVR Sonic, Machina and Infinite saw strong sales in 1Q21. During the quarter, the company launched its most technologically advanced running shoe, the UA Flow Velocity Wind. Management stated that the product is performing well against the company’s expectations.
Outlook	The company has revised up its fiscal 2021 outlook. Under Armour expects revenues to increase by a high-teen percentage rate versus the prior expectation of high single digits, reflecting a high-teen percentage increase in North America and a low-thirties percentage increase in its international business. For fiscal 2021, Under Armour expects adjusted EPS of $0.28–$0.30, an increase on the previous expectation of $0.12–$0.14. In 2021, the company plans to make additional investments to support its marketing efforts, helping drive awareness. These accelerated investments will primarily be in North America and other key markets including China and Germany, where brand awareness remains under penetrated. In Asia Pacific, the company will invest more in customer relationship management (CRM) and digital activations, which remain central in driving long-term increases in brand affinity. Under Armour continuously conducts operating-model improvements, and management believes that the company is on track to return to a double-digit operating margin over the long term.

Beauty Brand Owners

	Coty (NYSE: COTY) 3Q21
Commentary	Coty reported a 3.3% year-over-year decline in revenues during the quarter (a 48.4% decline versus the corresponding quarter in 2019). By channel, the prestige business accounted for 58.4% of total sales in the quarter. It returned to growth, increasing by 6.5% year over year, driven by a strong performance in China and the US. Prestige brands including Burberry, Gucci, Marc Jacobs and Philosophy all delivered strong double-digit year-over-year revenue growth. The mass business decreased by 14.3%, as a lack of use occasions led to a softening in mass color cosmetics. By region, the Americas saw a sales decline of 6.0% and EMEA sales fell by 7.8%, while Asia Pacific’s sales recovered strongly, growing 27.7%. E-commerce remained solid, with sales increasing by almost 30% in the quarter. Prestige e-commerce sales increased by over 20%, and mass e-commerce sales spiked over 50%.
Outlook	Coty expects to end fiscal 2021 with net revenues of $4.5–4.6 billion, implying a year-over-year sales decline of 2.5–4.7%. In the next quarter, the company plans to increase commercial investments to support its strategic priorities and to progress sell-out trends as the larger beauty market starts to recoup. On April 23, Coty outlined six strategic priorities during an Investor Update event: 1. Stabilize consumer beauty, makeup and mass fragrance brands. 2. Expand luxury fragrances and establish Coty as an important player in prestige makeup. 3. Build a skincare portfolio across its mass and prestige divisions. 4. Boost its e-commerce and DTC capabilities. 5. Grow in China through prestige and select consumer beauty brands. 6. Establish Coty as an industry leader in sustainability.
	Estée Lauder (NYSE: EL) 3Q21
Commentary	Estée Lauder reported a 16% year-over-year increase in revenues during the quarter (representing 3.0% growth versus the corresponding quarter in 2019). By category, both skincare and fragrance grew over 30% year over year. Skincare’s growth was led by the increase in sales of its brands Clinque, Dr. Jart+, Estée Lauder, La Mer and Origins. Fragrance category growth was driven by sales increases from its brands Estée Lauder, Jo Malone London, Kilian Paris and Tom Ford Beauty. Hair care was up 8% year over year, fueled by Aveda (which created a successful innovation, Botanical Repair) as well as strong double-digit online growth. Makeup remained sluggish, declining 11%, with major sales declines in foundation and lips. By geography, sales growth remained positive year over year in all regions, led by double-digit growth in Asia Pacific. The region witnessed sales growth in all categories. Total online sales grew globally by strong double digits year over year: Sales of own brands and third-party retailers rose by strong double digits, while pure-play grew by triple digits. Management said that online sales have nearly doubled in the past two years.
Outlook	For fiscal 2021, the company expects revenue growth of 11–12%. Estée Lauder remained optimistic that both government restrictions on, and consumer concerns about, travel and social activities will start to ease in certain markets due to accelerated vaccination efforts, driving the company’s business. While skin care and fragrance continue to perform well, the company is also preparing for a revival in makeup, as consumers increase their use occasion-based makeup in certain geographies.
	L'Oréal S.A. (ENXTPA: OR) 1Q21
Commentary	L’Oréal reported a 5.4% year-over-year increase in revenues during the quarter (0.8% growth versus the corresponding quarter in 2019). The company stated that all divisions except Consumer Products posted strong, double-digit year-over-year growth. The Professional Products division was up 12.9%, benefiting from trends including the digitalization of salons and e-commerce. L’Oréal Luxe’s outperformance of 12.4% growth was driven by skin care and fragrance. Active Cosmetics recorded the strongest growth of 21.8%, boosted both by health and wellness trends and e-commerce. Consumer Products was down 6.2%, held back by its heavy makeup exposure, while hair care and skin care accelerated. Asia Pacific was the only region that reported positive growth, with sales increasing by 19.1% year over year, driven by Mainland China. North America recorded a sales decline of 1.8%, and Western Europe saw a slight sales decrease of 0.1%. E-commerce grew 47.2% and accounted for 26.8% of the company’s total sales in the quarter. Travel retail recovered to positive growth, driven by the Asia-Pacific region, which accounted for 90%.
Outlook	The company did not provide specific financial guidance for fiscal 2021 but commented that it will achieve a year of growth in both sales and profits by focusing on product launches and investments in growth drivers.

Grocery Retailers

	Grocery Outlet Holding Corp (NasdaqGS: GO) 1Q21
Commentary	The company reported a sales decrease of 1% year over year. However, on a two-year basis (versus the first quarter of fiscal 2019), sales increased by 24%. Comparable store sales declined by 8.2% year over year, compared to a 17.4% increase in the same period last year, cycling the initial demand surge in March 2020. During the quarter, the company opened nine net new stores, increasing the store count to 389 stores in six states.
Outlook	The company noted that the trip-consolidation trend has continued in the second quarter, coupled with higher purchase baskets. Management commented that quarter-to-date comparable store sales for the second quarter are in the negative low double digits. In fiscal 2021, the company plans to incur capital expenditure of $130 million, net of tenant allowance, reflecting new store openings, existing store maintenance and improvement, and technology and infrastructure investments. Grocery Outlet reiterated its plans to open 36–38 stores and close one store in fiscal 2021. The company is also evaluating store layout to enhance the customer experience and support merchandising. Plans include moving its produce section to the front of the store and moving Natural, Organic, Specialty and Healthy Foods (NOSH), one of its highest-performing categories, into the first aisle.

E-Commerce

	Alibaba (NYSE: BABA) 4Q21
Commentary	Alibaba reported a 64% year-over-year increase in revenues during the quarter (100% growth versus the corresponding quarter in 2019). Overall, GMV for online physical goods, excluding unpaid orders, grew 33% year over year, primarily driven by the apparel and home-furnishing categories. For fiscal 2021, GMV transacted in the Alibaba ecosystem was $1.2 trillion, representing 15.1% year-over-year growth. Additionally, annual active customers reached a milestone of over 1 billion, representing 4.2% year-over-year growth.
Outlook	In fiscal 2022, Alibaba expects revenue growth of 29.7% year over year.
	Amazon (NasdaqGS: AMZN) 1Q21
Commentary	Amazon reported a 44% year-over-year increase in revenues during the quarter (82% growth versus the corresponding quarter in 2019). By segment, North America saw 40% year-over-year sales growth; International witnessed a 60% sales increase; and Amazon Web Services (AWS) reported sales growth of 32%. AWS added the highest year-over-year and quarter-over-quarter revenues in the company’s history and has become a $54 billion annualized-run-rate business. Amazon saw strong demand and sales growth across major product categories, including consumables, media, hardlines and softlines. The company now has over 200 million paid Prime members globally. During the quarter, the company continued to expand its autonomous delivery system, Amazon Scout, for order fulfillment to new cities and towns in the US. Scout uses small autonomous vehicles about the size of a small cooler, and since its launch in January 2019, it has delivered tens of thousands of packages to customers in California, Georgia, Tennessee and Washington. During the quarter, the company also introduced in-garage delivery in more than 5,000 cities and towns across the US, enabling free, contactless delivery of grocery orders from Amazon Fresh and Whole Foods Market. Amazon also continued to ramp up its air cargo network to meet increasing consumer demand. In January 2021, Amazon purchased 11 aircraft, aiming to expand its overall air fleet to over 85 aircraft by the end of 2022. During the quarter, Amazon launched Amazon One, a contactless payment option at its Madison Broadway Whole Foods store in Seattle. The company plans to expand the payment option to more Whole Foods in Seattle in the coming months. Amazon also expanded its cashierless “Just Walk Out” Fresh stores, opening its first three international locations (all in London, UK) and expanding into four more US cities. Amazon expanded its reach into live sports, becoming the exclusive broadcaster of Thursday Night Football, beginning in 2023. The company partnered with the New York Yankees and will stream a total of 21 games on Prime Video in 2021, and it added more coverage of English Premier League matches in the UK along with coverage of multiple major tennis tournaments. Amazon continues to prioritize sustainable initiatives. Management said that the company is on track to power its entire business with 100% renewable energy by 2025. During the quarter, the company partnered with Mahindra Electric, an India-based electric vehicle (EV) manufacturer, to deploy close to 100 EVs in India, furthering progress toward Amazon’s goal of including 10,000 EVs in its fleet by 2025.
Outlook	For 2Q21, the company expects sales growth of 24–30% year over year. Amazon forecasts operating income growth to be between (22)% and (38)%. Management are planning Amazon Prime Day to occur in the second quarter (April to June) versus the typical July date.
	eBay (NasdaqGS: EBAY) 1Q21
Commentary	Total revenues grew by 25% year over year and increased by 42% compared to 1Q19. Total GMV grew by 18% year over year. Annual active buyers grew by 7% to 185 million. The company’s luxury watch category experienced a double-digit GMV increase from 4Q20 to 1Q21, and its sneakers category saw triple-digit growth year over year in 1Q21, with the launch of its Authenticity Guarantee service for watches and sneakers.
Outlook	For 2Q21, eBay expects revenue of $2.94–2.99 billion, representing 35–37% year-over-year growth. This assumes marketplaces volume growth in the low twenties, driven by strength in e-commerce and continued user experience improvement. In 2Q21, the company expects an expansion of its take rate, driven by managed advertising and payments, as well as by ongoing strong performance.

Home and Home-Improvement Retailers

	Tractor Supply Company (NasdaqGS: TSCO) 1Q21
Commentary	Total revenues grew by 42.5% year over year and increased by 53.2% compared to 1Q19. Comps grew 38.6% year over year, compared to 4.3% in 1Q20 and 5.0% in 1Q19, driven by average transaction growth of 21.0% and ticket growth of 17.6%. Tractor Supply highlighted that all geographic regions registered comp growth of at least 30% year over year. The company noted that its strong comp growth indicated strong demand for everyday merchandise, including consumable, edible and usable products, as well as seasonal categories. Tractor Supply Company’s e-commerce sales experienced triple-digit year-over-year growth for the third consecutive quarter. The company’s gross margin increased 148 basis points year over year to 35.2%, which it attributed mainly to a favorable product mix, lower depth and frequency of sales promotions, and less clearance activity.
Outlook	For fiscal 2021, Tractor Supply has revised up its expectations. The company now expects comps of 5–8% versus prior expectations of (2)% to 1%. Tractor Supply expects an operating margin of 9.4–9.7% versus prior expectations of 9.3–9.6%. Tractor Supply reiterated its plan to incur a capital expenditure of $450–550 million for fiscal 2021. This capital expenditure includes the opening of 80 new Tractor Supply stores and 10 new Petsense stores (Petsense is a retailer of pet foods and supplies, which Tractor Supply acquired in 2016). Furthermore, the company plans the transformation of 150–200 Side Lots and the remodeling of 150–200 existing Tractor Supply stores.
	Wayfair (NYSE: W) 1Q21
Commentary	Wayfair reported 52.2% year-over-year growth in revenues during the quarter (84.2% growth versus the corresponding quarter in 2019). By geography, US revenues increased by 43% year over year, and international revenues grew 85%. Wayfair became profitable for the fourth time since it went public in 2014, reporting a net profit of $18.2 million (2Q20 was its first profitable quarter). The number of active customers in the company’s Direct Retail business grew 57% year over year, reaching 33.2 million as of March 31, 2021. Around 60% of total orders delivered its Direct Retail business in 1Q21 were placed via mobile devices, versus 54.8% in the year-ago quarter. The company’s repeat customers accounted for 74.5% of total orders in 1Q21, versus 69.8% in 1Q20.
Outlook	For 2Q21, the company expects revenues to be higher than that of the first quarter’s revenues. It also expects 2Q21 adjusted EBITDA to be at or above 1Q21 levels and that the company will be strongly profitable in every quarter of 2021.

Luxury

	Canada Goose (TSX: GOOS) 4Q21
Commentary	Canada Goose reported 48.2% year-over-year revenue growth during the quarter (33.7% growth versus the corresponding quarter in 2019). The company’s e-commerce revenues rose by 2% year over year, boosted by growth rates of high double digits to low triple digits in all major existing markets. DTC revenues were up 50.6%, driven by e-commerce growth and expansion in Mainland China, although this was offset by lower in-store revenues in other markets that are still facing pandemic-related disruptions. Wholesale revenues were up 33.2%. Gross margin growth was flat, and EPS was up by 50.0%.
Outlook	Canada Goose expects total revenues to exceed $1 billion in fiscal 2022, based on annual DTC revenues comprising 70% of total revenues and wholesale revenues remaining in line with fiscal 2021. Total revenues in 1Q22 are assumed to be less than double the revenues reported in 1Q21, of $26.1 million.
	Tapestry (NYSE: TPR) 2Q21
Commentary	Total sales increased 18.7% year over year and declined by 4% compared to 2Q19. By region, North America drove recovery with a mid-teens sales increase compared to the prior year, as trends improved across stores, digital and wholesale channels. In Asia, direct sales were up 40% compared to 2Q20 and were in line with 2Q19, driven by significant gains in Greater China. Sales remained below pre-pandemic levels in the rest of Asia, with pressure in Japan, where a state of emergency was announced. European sales slowed down as lockdowns were announced in various countries. E-commerce growth was up in the triple digits and continued to drive sales. The company noted an improvement in store traffic trends as vaccines continue to be rolled out globally. The company launched an e-commerce platform for Coach on Douyin (the Chinese version of TikTok) during the quarter.
Outlook	For the full fiscal year 2021, the company expects revenue growth in the mid-teens on both a 52-week and 53-week basis. It expects fourth-quarter sales to rise around 110% as compared to the prior year and reach close to fiscal 2019 levels of revenue on a 13-week basis. Its fourth-quarter projections include the impact of an additional week, which could contribute approximately $100 million in incremental sales. Tapestry has been experiencing some distribution network disruption, due to pandemic-related global shipping-capacity constraints and port congestion. As a result, Tapestry is experiencing longer lead times and delayed receipts, particularly for inventory arriving at West Coast ports. This may limit the company’s ability to meet higher levels of demand, should it rise. Tapestry noted that the disruptions due to the Suez Canal blockage will have a modest impact on its fourth-quarter results and that it expects to continue to incur higher freight costs due to the environment. Tapestry has factored in these uncertainties into its outlook. In June, Tapestry plans to hold a Coach fashion show for its Winter ’21 collection in Shanghai, which will be livestreamed.

Luxury E-Commerce

	Farfetch (NYSE: FTCH) 1Q21
Commentary	Farfetch reported 46% year-over-year growth in revenues during the quarter (a 179% increase versus the corresponding quarter in 2019). Growth was driven by a 68.1% year-over-year jump in its Digital Platform revenues, partially offset by the comparatively lower Brand Platform revenue growth of 4.5%. Total GMV increased by 49.9% year over year to $915.6 million. Digital Platform GMV leapt 59.6% to $790.0 million, and Brand Platform GMV increased by 4.5% to $112.3 million. Adjusted EBITDA improved to a loss of $19 million versus a loss of $22 million in the first quarter of 2020. During the quarter, Farfetch launched a storefront on Alibaba's Tmall Luxury Pavilion and opened a new boutique equipped with connected technology in London.
Outlook	For fiscal 2021, Farfetch expects Digital Platform GMV of $3.7–3.9 billion, representing growth of 35–40% year over year, two-year growth of 91–98% and an adjusted EBITDA margin of 1–2%. For 2Q21, the company expects Digital Platform GMV of $910–945 million,  representing growth of 40–45% year over year. This accounts for the annualization of new customer growth last year, as well as the launch of offwhite.com on Farfetch Platform Solutions, the company's white-label suite of solutions for brands and retailers. Farfetch stated that moving forward these are now like-for-like within the Digital Platform. It expects Brand Platform GMV of $50–60 million and adjusted EBITDA to come in at $(23)–(25) million in the second quarter. Farfetch stated that it expects online luxury shopping’s accelerated adoption to sustain and continue to grow.
	The RealReal (Nasdaq: REAL) 1Q21
Commentary	The company reported a sales increase of 27% year over year. Compared to 1Q19, sales were up 26%. GMV grew by 27% year over year and increased by 45% compared to 2019. Consignment and Service revenues were $75.1 million, up 15%. Direct revenues were $23.7 million, up 83%. Gross profit grew 19% to $58.3 million, and EPS was $0.62, up from $(0.44) in the year-ago quarter. Orders placed totaled 690,000, up 20% year over year, while average order value rose 6% to $474 driven, primarily driven by a 10% increase in average selling price. The company added the largest quarterly number of new consignors to its platform to date. As of April 2021, cumulative consignor commission payouts surpassed the milestone of $2 billion.
Outlook	The RealReal is performing strongly in its fine jewelry and high-value handbag categories. For its second quarter, the company expects GMV of $320–330 million, representing a growth of 75–80%. The company is continuing to expand its physical presence with smaller “neighborhood stores.” It is on track to open 10 by the end of the second quarter. The company resumed in-home concierge appointments in March and expects to rapidly expand the service over the course of the year.

REITs

	Brookfield Property Partners (NasdaqGS: BPY) 1Q21
Commentary	Brookfield Property Partners reported a 24% year-over-year decline in revenues during the quarter (a 30% decline versus the corresponding quarter in 2019). The company’s Core Retail revenues declined by 10.5% year over year to $332 million. The company reported 91.7% occupancy in Core Retail, versus 95.4% for the same quarter last year and 92.5% at the end of its last financial year. Group net income of $731 million compared to a net loss of $373 million in the period the previous year, resulting in net income per unit (share) of $0.25 in the latest quarter compared to a loss per unit of $0.49 for the same period last year. Funds from operations (FFO) totaled $125 million versus $309 million last year. The company noted that the decrease was driven by expirations and incremental abatements in its Core Retail portfolio, as well as gains on the sale of its interest in two operating companies that benefited the prior year. Core Retail generated an FFO of $108 million in 1Q21, compared to $195 million a year earlier.
Outlook	The company offered no financial guidance. In April, Brookfield Property Partners announced that it had reached an agreement to be acquired by Brookfield Asset Management. The company’s CEO Brian Kingston stated, “While we continue to experience challenges in certain of our operations and markets due to the ongoing consequences of the pandemic and global economic slowdown, we remain encouraged by a recovery in activity in select sectors within our business.”
	Macerich Company (NYSE: MAC) 1Q21
Commentary	Total sales declined by 16.1% year over year and decreased by 15.9% compared to 1Q19. At the end of the quarter, portfolio occupancy was 88.5%, compared to 93.1% one year earlier and 89.7% at the end of the prior quarter. Company management noted the loosening of restrictions is especially apparent in its key markets of New York and California, which were the most capacity-restricted markets in 2020. Coupled with “significant pent-up demand and economic stimulus,” management reported that “sales and traffic continue to improve across the portfolio.” First-quarter comparable tenant sales across Macerich’s portfolio were 2.0%, down versus 1Q19, and excluding food and beverage outlets, were up 1.9% versus the same period. The company reported a loss of $63.6 million compared to a net profit of $7.5 million in the year-ago quarter. Underlying FFO (excluding financing expense in connection with Chandler Freehold) was down 38.4% to $75.6 million, yielding FFO per share of $0.45 versus $0.81 one year earlier.
Outlook	For fiscal 2021, management guided for a loss per share of between $0.35 and $0.55 and a positive diluted FFO per share of $1.77–1.97. Management pointed to “numerous” near-term openings, including two Primark stores and a number of fitness centers. CEO Thomas O'Hern stated, “In terms of our core business, we are at an inflection point. As we indicated last quarter, we expected occupancy to hit its lowest level in the first quarter and, in fact, it did at 88%, which is slightly lower than the low point coming out of the financial crisis in 2009. Post GFC [global financial crisis], by mid-2011, we were back to 92% occupancy. The absorption space happened fairly quickly. We expect to see a similar recovery post-Covid, perhaps better, as today, we have a much higher-quality portfolio than we did 10 years ago—although some of our first-quarter operating metrics reflected the ill effects of final retroactive Covid-related rent abatements. The prospects going forward are extremely positive, and we expect to see a very strong recovery over the balance of the year and going into 2022.” O'Hern noted that “the deal flow is back to pre-Covid levels.”
	Simon Property Group (NYSE: SPG) 1Q21
Commentary	Total sales declined by 14% year over year and fell 20% compared to 1Q19. FFO per share declined 10.8% year over year. Occupancy on a same-store basis slightly declined to 90.8%, versus 91.3% in the prior quarter. During the quarter, the company signed 1,100 leases for about 4.4 million square feet. Management said that the company has a significant number of leases in its pipeline, and its leasing volume in the quarter was higher than the volume in each of the first quarters of 2020 and 2019. In the quarter, the company recorded a $0.07 per share negative impact on the company’s FFO due to domestic rent abatements and uncollectible rents. In April 2021, the company opened West Designer Outlet center, which includes 197,000 square feet of stores offering open-air retail and leisure experiences. Simon owns a 23% stake in this center.
Outlook	Simon has revised up its full-year 2021 guidance. The company now expects FFO per share of $9.70–9.80 for fiscal 2021, versus prior expectations of $9.50–9.75. CEO David Simon said that the company is seeing encouraging trends in terms of sales, traffic and retail demand.
	Unibail-Rodamco-Westfield (AMS: URW) 1Q21
Commentary	The company reported a 43% year-over-year decline in revenues during the quarter (42% decline versus the corresponding quarter in 2019). In a 1Q trading update, Unibail-Rodamco-Westfield (URW) noted that shopping center revenue and gross rental income both declined by 30.1% year over year. Shopping center gross rental income declined by 16.9% in the US, 20.3% in Spain, 36.3% in France, 43.0% in Germany and 63.1% in the UK (among others) due to forced closures or restrictions that impacted food and beverages or entertainment. At the end of the quarter, 57% of the company's shopping centers faced restricted trading. In 1Q21, URW had zero days of normal trading versus 70 days in the year-ago quarter. Management noted that footfall was down 58% in Europe and down 41% in the US in the quarter. Tenant sales performance improved progressively, standing at 69%, 74% and 87% of 2019 levels for January, February and March, respectively. The company’s vacancy rate increased by 50 basis points versus December 2020, to 8.8%. This was mainly driven by the UK, where vacancy rose from 9.7% to 12.6%, primarily due to tenants that are not expected to reopen after the extended 1Q lockdown, bankruptcies and lease surrenders. In Continental Europe, the vacancy rate stood at 5.4%, up from 4.9% in the prior quarter, driven by Germany and France. In the US, the vacancy rate increased by 30 bps from 13.1% to 13.4%.
Outlook	Exposure to Europe means that company management anticipates that the Covid-19 impact on its full-year 2021 performance “will remain significant.” Because of uncertainties over the timing of reopening in many markets, management did not provide a full-year outlook. However, it noted that “the strong return of footfall, as well as high turnover of retailers upon reopening and lifting of restrictions, gives us strong confidence for the latter part of the year and 2022.” At the company's May 12 annual general meeting, Chairman of the Supervisory Board Leon Bressler noted, “The performance of the group has been strongly impacted during 2020 as during the first quarter of 2021, Q1. And against this backdrop, the Board of Directors forecasts 2021 being adversely impinged upon. So, there will be severe restrictions which will affect the group well beyond Q1.”

Looking Forward

Although consumers are increasingly returning to public places and social activities, the latest quarter continued to see strength in home-related merchandise: Tractor Supply and Wayfair posted strong double-digit sales growth on a two-year basis. The Covid-19 crisis continued to support e-commerce formats, with Amazon, Alibaba and eBay reporting strong sales growth, continuing a trend seen in the past couple of quarters. These retailers continue to invest in consumer engagement and the digital transformation of businesses. Amazon continued to prioritize sustainability by investing in renewable energy. We expect e-commerce retailers to maintain their winning streak in the next quarter as consumers’ structural shift toward online retail continues. In the discretionary category, beauty continues to see a strong recovery. However, while demand for skin care and fragrances remains strong, makeup is seeing weakness. In the apparel and footwear categories, casualwear, athleisure and innerwear continue to trend well, while the demand for tailored clothing remains weak. The luxury category saw a substantial recovery, with luxury companies (Canada Goose and Tapestry) and luxury e-commerce platforms (Farfetch and The RealReal) posting strong sales growth. We believe that the luxury category will continue to see strong growth in the next quarter with the further easing of pandemic-related restrictions around the world. REITs continued to post weak results in their latest quarter. However, most REITs remain optimistic about business recovery in the rest of 2021. Simon Property Group noted that it is witnessing encouraging trends in terms of sales, traffic and retail demand.