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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sales were below the company’s expectations due to inflationary pressures, seasonal weather impact and downward pressure from the home and kids segments, which were both down by double digits in percentage terms compared to 1Q21. Management reported its units per transaction have come under more pressure this quarter, reflecting a customer “whose wallet is being squeezed.”

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

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

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

Kohl’s updated its fiscal 2022 financial guidance to reflect first-quarter results and incorporate uncertainty in the macroeconomic environment, recognizing many headwinds, including inflation. For the full-year 2022, the company revised down its sales and EPS guidance and now expects sales growth of flat to 1.0% year over year, compared to the previous guidance of 2.0%–3.0% growth. It expects EPS in the range of $6.50–$6.90, compared to prior guidance of $7.00–$7.50, representing growth of 1.4%–7.6% year over year. The company expects gross margins to be down 100–125 bps year over year due to elevated freight expense and product cost inflation.

In 2Q22, Kohl’s plans to open 300 Sephora shop-in-shops at Kohl’s locations and 50 more in early August 2022.

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

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

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

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

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

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

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

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

Deckers Outdoor Corporation reported net sales growth of 31.2% year over year, versus 10.2% growth in the prior quarter. EPS increased by 112.7% year over year, while the company’s gross margin was down 450 basis points (bps) year over year to 48.7% due to elevated freight costs.

By brand, UGG brand net sales increased by 24.7%, HOKA brand net sales increased by 59.7%, Teva brand net sales decreased by 8.8% and Sanuk brand net sales decreased by 1.7%.

By channel, wholesale net sales increased by 37.6%, and direct-to-consumer (DTC) net sales increased by 22.2% year over year.

By geography, domestic net sales increased by 37.4% year over year, and international net sales increased by 18.2%.

On the factory production front, Deckers has successfully secured additional production lines with existing partners and onboarded new partners. The company believes this will support its plan to continue fueling brand growth and allow it to expand capabilities and capacities in fiscal 2023 and beyond.

Meanwhile, Deckers continued to see higher prices across most of its supply chain, with some moderation. Specifically, the company expects ocean freight costs to remain a headwind. However, it believes that impacts from ocean freight and material cost inflation can be mitigated by planned price increases for the HOKA and UGG brands later in calendar 2022.

For fiscal 2023, Deckers expects its net sales to be in the range of $3.4–3.5 billion, representing 10%–11% growth year over year, with HOKA growing in the mid-to-high 30.0% range and UGG growing by a low-single-digit. It expects EPS to be $17.40–$18.30, representing growth of 6.4%–12.5% year over year. The company expects its gross margin to be 51.5%, 50 bps higher than last year.

VF Corporation’s revenue from continuing operations increased by 9.0% year over year, versus 22.0% in the prior quarter. At the same time, adjusted EPS increased by 67.0% year over year, and the company’s adjusted gross margin was down 50 bps year over year to 52.2% due to incremental freight costs.

By segment, active’s revenue increased by 1.0% year over year, and outdoors’ revenue increased by 20.0%, including a 24.0% increase in The North Face brand. Meanwhile, work’s revenue increased by 6.0%, including an 8.0% increase in the company’s Dickies brand.

VF Corporation continued to see strong growth across channels and categories. The company launched several innovation initiatives for the Timberland brand in the quarter, including Timber Loop, an end-to-end circular design e-commerce platform. It is also transforming how the company goes to market, increasing digitization across product creation, merchandising and supply, further elevating the output while becoming quicker, more agile and more efficient. The company’s use of 3D design across product creation has led to a significant increase in new apparel and footwear styles developed with these technologies. According to the company, nearly 40.0% of Vans’ global footwear line is now designed and developed on an automated 3D configurator.

VF Corporation has taken pricing actions across its brands to offset inflationary pressures. It is procuring supplies earlier, anticipating order book collection and investing in technology to create efficiencies and reduce lead times. The company is also expanding its local-for-local sourcing strategy, servicing an increasing regional demand with locally manufactured products. At the same time, the company secured additional capacity by doubling the number of ports of entry and ocean carriers used relative to pre-pandemic levels instead of using alternate origin routings and other methods.

For fiscal 2023, the company expects its total revenues to grow at least 7.0% in constant dollars, including low double-digit percentage growth in its North Face brand and mid-single-digit percentage growth in Vans. The company expects its gross margin to be up 50 bps year over year and EPS growth of 11.0%–14.0% year over year.

VF Corporation mentioned that the environment in China continues to be challenging as 12.0% of the company’s stores were closed at the end of the fourth quarter, 20.0% are currently closed (as of May 19, 2022), and the company does not anticipate they will reopen before early June. Digital traffic also continues to be impacted in the area, according to the company. As a result, the company expects its business in China to be down approximately 35.0% in 1Q23, with a gradual recovery over the rest of the year. Overall in China, the company expects mid-single-digit revenue growth year over year and remains confident in the region’s long-term growth opportunity.

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

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

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

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

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

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

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

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

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

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