DIpil Das
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 2Q22 performance (ended July 31, 2022, for most companies).
Companies featured are those within our Coresight 100 coverage list, and we focus on those that reported in the week ended July 31, 2022. The quarter under review for most US retail companies covered in this series will be the 2Q22.
In April 2022, US retail sales increased by a revised 5.5% year over year, against strong 2021 comparatives, indicating healthy retail sales. In May 2022, US retail sales increased by a revised 6.1% year over year, against very strong May 2021 retail sales data (when pandemic-driven stimulus checks proved a boost to retail spending). In June 2022, US retail sales remained nominally healthy, growing 5.6% year over year. With our inferred retail-only inflation metric at 7.6%, 5.6% overall growth in retail sales in June implies consumers are buying fewer items at the store, and there was a real terms sales decline of around 2.0%. US retail traffic grew 2.9% year over year in June 2022, lower than May’s growth of 8.1% year over year.
We assess the recent performance of selected retailers below.
Apparel and Footwear Brand Owners
| Columbia Sportswear Company (NasdaqGS: COLM) 2Q22 | |
| Commentary | Columbia Sportswear’s net sales increased by 2.0% year over year in the second quarter, compared to 22.0% growth in the prior quarter. Meanwhile, its diluted EPS decreased by 82.0% year over year. The company’s gross margin declined by 240 basis points (bps) year over year to 49.2% due to higher inbound freight costs and lower wholesale margins, although it was partially offset by a favorable channel and regional sales mix. By channel, wholesale net sales decreased by 1.0%, largely due to substantially lower Russia-based distributed sales. Excluding distributor markets, global wholesale increased by a low-teens percentage, reflecting shipments of the company’s spring 2022 line. The company’s direct-to-consumer (DTC) business increased by 5.0% year over year in the second quarter, driven by 11.0% brick-and-mortar DTC sales and partially offset by a 5.0% decrease in DTC e-commerce sales. Brick-and-mortar growth exceeded e-commerce growth in the quarter in part due to consumers’ increased desire to shop in stores. E-commerce sales declined in the quarter due to lower product and Chinese e-commerce sales. By brand, SOREL was the company’s fastest-growing brand in the quarter. Its net sales increased by 24.0%, driven by the year-round and summer categories. The Columbia brand’s net sales were flat in the quarter but saw “great customer responses to product collaborations,” according to the company. Meanwhile, PrAna’s net sales increased by 3.0%, and Mountain Hardware’s net sales increased by 18.0% year over year. By region, US sales increased by 9.0% year over year, Canada sales increased by 69.0% and Latin America and Asia Pacific region sales declined by 7.0% each. In China, the country’s zero-tolerance Covid-19 policies resulted in a sharp 40.0% net sales decline. Japan’s sales increased by 30.0% year over year, driven by strong consumer demand and the lapping of state of emergency declarations, which hindered sales in the previous year. Sales in the Europe, Middle East and Africa region (EMEA) declined by 35.0% year over year due to the impact of the ongoing Russia-Ukraine war. |
| Outlook | Columbia Sportswear lowered its fiscal 2022 financial guidance and now expects net sales growth of 10.0%–12.0% year over year, compared to its prior guidance of 16.0%–18.0%. It expects its EPS in the range of $5.00–$5.40, compared to its previous guidance of $5.70–$6.00, representing year-over-year growth of (6.2)%–1.3%. The company expects its gross margin to decline by 180–210 bps year over year to 49.5%–49.8%, compared to its previous guidance of a 130 bps decline to 50.3%. It also expects its operating margin to be 12.1%–12.8% year over year, down from the prior guidance of 13.2%–13.6%. The company is facing several headwinds, including zero-tolerance Covid-19 policies in China, inflationary pressures, rising interest rates and recession fears. The company’s updated outlook takes into consideration the risks of higher order cancellations and more conservative DTC assumptions. It also assumes a more promotional environment as the company seeks to rationalize inventory levels. Management stated that it has navigated numerous economic cycles in the past and, therefore, is confident that it can manage the downturn risks. For the second half of fiscal 2022, Columbia Sportswear anticipates sales growth of 9.0%–12.0% year over year, a gross margin decline of 170–220 bps year over year and EPS growth of (1.5)%–8.7% year over year. |
| Deckers Outdoor Corporation (NYSE: DECK) 1Q23 | |
| Commentary | Deckers Outdoor Corporation reported net sales growth of 21.8% year over year, versus 31.2% growth in the prior quarter, primarily driven by HOKA, as the brand achieved its first quarter with $300 million in sales. The company’s EPS declined by 2.9% year over year, and its gross margin was down 360 bps year over year to 48.0% due to elevated freight costs. By channel, wholesale net sales increased by 24.7% year over year, while DTC net sales increased by 15.4% year over year. Meanwhile, by geography, domestic net sales increased by 14.4% year over year, and international net sales increased by 36.4% year over year. By brand, HOKA’s net sales increased by 54.9% year over year to $330.0 million compared to $213.1 million in the first quarter of fiscal 2022. HOKA stores have continued to build excitement with a new audience, driving traffic and purchase activity. UGG’s net sales decreased by 2.4% year over year, while Teva’s net sales increased by 2.0% year over year. Sanuk brand net sales decreased by 5.9% year over year. Deckers is seeing some improvement in its supply chain. Transit times have improved relative to last year; however, the company is still experiencing latency and lower visibility into its inventory timing—with nearly 40.0% of its inventory in transit—and thus is continuing to prioritize holding inventory for sale. Management stated that the company feels comfortable holding higher inventory levels to enable its brands to meet the significant marketplace demand. |
| Outlook | For fiscal 2023, Deckers reiterated its sales guidance, expecting its net sales to be in the range of $3.4–3.5 billion, representing 10%–11% growth year over year. However, it raised its EPS guidance and now expects EPS to be $17.50–$18.35, compared to prior guidance of $17.40–$18.30, representing year-over-year growth of 7.6%–12.9%. The company continues to expect its gross margin to be 51.5%, 50 bps higher than last year. The company is confident that the price increases implemented by its HOKA and UGG brands will offset freight headwinds and help bolster second-half margins to deliver its fiscal 2023 guidance. |
| Levi Strauss & Co (NYSE: LEVI) 2Q22 | |
| Commentary | Levi Strauss & Co reported revenue growth of 15.0% year over year versus 22.0% in the prior quarter, driven by strong growth across all its business segments. Its adjusted EPS increased by 26.1% year over year. The company’s adjusted gross margin remained flat year over year at 58.2% due to improved structure elements, including a mix shift to higher gross margin DTC and a sustainability improvement in its wholesale segment. By channel, global DTC net revenues increased by 16.0% year over year, driven by growth in company-operated stores, which grew 23.0%. Meanwhile, global wholesale revenues increased by 15.0% year over year. Net revenues through all digital channels represented 20.0% of total second-quarter net revenues, up 3.0%—on top of 75.0% growth in the same quarter of the prior year. By geography, the Americas’ net revenues increased by 17.0% year over year, driven by higher unit volumes. Specifically, Latin America revenues increased by 18.0%, driven by sales growth in Brazil, Chile and Peru. Europe’s net revenues increased by 3.0% year over year, despite the impact of the Russia-Ukraine war. Asia’s net revenues increased by 16.0% year over year, with most markets contributing to that growth, except China, where Covid-19 lockdowns have persisted. Levi’s revenue increased by 20.0% year over year, with bottoms revenue up double-digits across both the men’s and women’s categories. Sales of Levi’s 501 series jeans were up 40.0% in the quarter, demonstrating the demand for the brand’s most iconic product. During the quarter, Levi’s benefited from a return of tourist traffic in many locations, propelling growth in flagship stores in key cities, including London, New York, Paris and San Francisco. The latest generation of its new stores continues to outperform the company’s expectations. The success of these new stores reinforced Levi’s plan to have more than 1,500 company-operated stores by 2027. Levi’s saw a moderation in online traffic as consumers returned to shopping in stores. However, management states that e-commerce remains an important growth driver, and the company is committed to tripling its e-commerce size over the next five years. |
| Outlook | Levi’s reaffirmed its expectations for fiscal 2022, expecting net revenues to grow 11.0%–13.0% year over year to $6.4–6.5 billion. It expects an adjusted EPS of $1.50–$1.56 in fiscal 2022, representing 2.0%–6.1% year-over-year growth. The company expects to see continued demand for its denim products. Currently, the company is comfortable with the overall level composition and quality of its inventory on hand, and it believes supply chain costs will come down this year. |
| Skechers U.S.A., Inc. (NYSE: SKX) 2Q22 | |
| Commentary | Skechers sales increased by 12.4% year over year versus 26.8% growth in the prior quarter. Its diluted EPS increased by 22.2% year over year, while its gross margin declined by 250 bps year over year to 45.3% due to high per-unit freight costs. Second quarter sales increased as a result of a 15.4% increase in domestic sales and a 10.0% increase in international sales, driven by wholesale sales. By channel, Skechers’ wholesale business sales increased by 18.3%, and its DTC sales increased 4.3% year over year. In wholesale, Skechers saw more growth in units than in price. On the DTC side, the company saw close to flat growth of units while prices went up. According to the company, consumers’ responses to price increases remained stable in the quarter. By region, the company’s revenue growth was mainly driven by sales increases of 21.0% in the Americas and 8.0% in EMEA. Asia Pacific sales were flat year over year, primarily due to Covid-19 policies in China, which offset strong growth in most other Asia Pacific markets. The rollout of Skechers’ new e-commerce platform continued in 2Q22 with the launch of new sites in Belgium, the Czech Republic, Hungary, Italy, Netherlands and Portugal. The company expects to launch two additional sites in Europe, two in South America and one in Japan before the end of 2022. In the second quarter, Skechers opened 46 company-owned stores, including 15 in the US, nine in China and seven in India. It closed 34 locations in the quarter, including five in the US and 24 in China. |
| Outlook | For full-year 2022, Skechers reiterated its sales guidance, expecting sales of $7.2–7.4 billion—growth of 14.3%–17.5%—year over year. However, it revised down its EPS growth guidance and now expects its EPS to be between $2.60 and $2.70, compared to its prior guidance of $2.80 and $2.90, representing a decline of 42.9%–45.0% year over year. For the third quarter of 2022, Skechers believes it will achieve sales of $1.80–1.85 billion, representing growth of 16.0%–19.0% year over year. Meanwhile, the company expects a diluted EPS of $0.70–$0.75, representing 6.0%–14.0% year-over-year growth. The company is actively investing in distribution centers in the US, China and India to improve the efficiency of its supply chain, expecting its supply chain to normalize in the next two quarters. Skechers also expects some level of “promotionality” to reemerge in the back half of 2022. |
| VF Corporation (NYSE: VFC) 1Q23 | |
| Commentary | VF Corporation’s revenue increased by 2.0% year over year, versus 9.0% in the prior quarter. At the same time, adjusted EPS declined by 68.0% year over year, and the company’s adjusted gross margin was down 260 bps year over year to 54.1% due to incremental freight costs, partially offset by price increases. 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. By channel, wholesale revenue increased by 18.0% year over year, while DTC revenue declined by 3.0% year over year. By geography, the Americas’ revenue increased by 7.0% year over year, whereas revenue in EMEA increased by 24.0% year over year. Asia Pacific revenue declined by 15.0% year over year due to Covid-19 policies in China. The aggregate sales of the company’s big four brands (Dickies, The North Face, Timberland and Vans) were up 2.0% year over year, led by The North Face and Timberland. Vans’ first quarter sales declined by 4.0% year over year; however, excluding China, global sales were up 4.0% year over year for the brand. Although impacted by pandemic restrictions in China, Vans launched a new collaboration with Brain Dead, a lifestyle brand, which sold out in the first hour in China. As such, Vans remains confident in China as a long-term growth opportunity. The North Face had a strong quarter, with sales up 37.0% year over year, with growth across regions and channels. Collaborations continue to drive brand demand, including the Earth Day-inspired collaboration with US-based streetwear label Online Ceramics, which drove digital sales in the US and EMEA. Timberland’s sales were up 14.0% year over year, driven by men’s footwear (led by outdoor). Apparel was also strong for Timberland, especially lightweight outerwear and logo tees. Dickies brand sales were down 13.0% year over year, while Supreme’s year-over-year sales growth remained flat in the quarter. Management stated that the company has started to see the level of supply chain disruption ease, and, in terms of logistics, it is seeing improved transit times. Still, eight weeks of lockdowns in China during the quarter will take some time to overcome, but the company feels it is well-placed to recover quickly. |
| Outlook | VF Corporation maintained its currency-adjusted fiscal 2023 sales guidance, although it revised down its EPS guidance on a reported dollar basis to reflect the ongoing negative impact of foreign currency fluctuations. The company now expects adjusted EPS growth of 4.0%–7.0% year over year, compared to its prior guidance of 11.0%–14.0%. The company expects its total revenue to be up at least 7.0% in constant dollars, unchanged from the previous outlook. It expects its gross and operating margins to both be up slightly versus last year. The company has implemented a supply chain financing program with the majority of its finished goods suppliers. The program allows VF Corporation to take ownership of inventory from its suppliers at the point of shipment, as opposed to the past, when the company generally took ownership at the destination point. The company expects that this will result in it owning the inventory for an additional month or two. |
CPG
| Kimberly-Clark Corporation (NYSE: KMB) 2Q22 | |
| Commentary | Kimberly-Clark Corporation’s total revenues increased by 7.0% year over year, in line with its 7.0% growth in the prior quarter. Comparable sales increased by 9.0% year over year, led by an increase in net selling price. Adjusted EPS declined by 9.0 year over year. The company stated that the sales growth results were impacted by $470 million of higher input costs, mainly due to cost increases in pulp and polymer-based materials, distribution and energy. By region, North America’s comp sales increased by 11.0% year over year in the consumer products segment and 8.0% year over year in the K-C professional segment. Outside North America, comp sales increased by 8.0% in developing and emerging (D&E) markets and 9.0% in developed markets. By segment, personal care sales increased by 8.0% year over year, consumer tissue sales increased by 8.0% and K-C professional sales increased by 5.0% year over year. The company’s adjusted operating profit increased by 1.0% year-over-year. The company said that while it benefitted from organic sales growth and $45 million of cost savings due to its FORCE (Focused On Reducing Costs Everywhere) program, the operating profit was impacted by $405 million of higher input costs. Furthermore, higher marketing, research and general expenses, along with unfavorable foreign currency transactions, impacted the operating profit for the quarter, according to the company. Chairman and CEO Mike Hsu stated, “Our results also reflect ongoing market volatility and significant input cost inflation. We continue to be thoughtful with our response to inflation, focusing on providing value to our consumers while leveraging price and cost discipline to mitigate macro headwinds for margin improvement over time.” |
| Outlook | The company reiterated its sales guidance but raised its comp sales guidance for full-year 2022. It expects net sales growth to be 2.0%–4.0% year over year and comp growth to be 5.0%–7.0% year over year, compared to its prior guidance of 4.0%–6.0%. Kimberly-Clark expects adjusted operating profits to be down mid-single digit percent versus the previous guidance of down low- to mid-single digit, year over year. It expects its EPS to be in the range of $5.60–$6.00, representing 4.1%–11.5% year-over-year growth. Kimberly-Clark expects costs to remain elevated for most inputs. The company expects its input costs for the full-year 2022 to increase to $1.4–1.6 billion, up from the prior guidance of $1.1–1.3 billion. |
Drugstore Retailers
| Walgreens Boots Alliance (NasdaqGS: WBA) 3Q22 | |
| Commentary | Walgreens Boots Alliance reported a revenue decline of 2.8% year over year on a constant-currency basis versus 3.8% growth in the prior quarter, as it cycled the robust Covid-19 vaccinations and testing in the same quarter of last year. Its adjusted EPS was down 28.9% year over year on a constant-currency basis. By geography, US sales declined by 7.1% on a constant-currency basis due to a decline in the AllianceRx Walgreens business. US comp sales increased by 1.8% year over year. Meanwhile, adjusted gross profits decreased by 9.6%, reflecting a decline in pharmacy results as it lapped the prior year’s peak Covid-19 vaccinations—although positive contributions from retail sales partly offset that. US adjusted operating income declined by 34.4%. International sales increased by 9.3% year over year on a constant-currency basis. Adjusted gross profit for the international region increased by 11.3% year over year on a constant-currency basis, reflecting strong sales growth in the UK—up 13.5% year over year. On a constant-currency basis, adjusted operating income for the international region was more than double compared to the prior year. Walgreens’ digital sales increased by 25.0% year over year on top of 95.0% seen in the year-ago quarter, driven by 2.8 million same-day pick-up orders in the US. The company enrolled over 99 million myWalgreens members—a membership program where members receive 1.0% in cash rewards storewide on eligible purchases and 5.0% in cash rewards on Walgreens branded products—up 3 million from 2Q22. During the third quarter, Walgreens administered 4.7 million Covid-19 vaccinations and 3.9 million Covid-19 tests in the US. |
| Outlook | The company reiterated its full-year guidance for its adjusted EPS, expecting it to grow by a low-single-digit percentage. However, it raised its guidance for its “base business” from 6.0%–8.0% growth to 7.0%–9.0% year over year, reflecting strong US front-of-store sales and increased Covid-19 vaccination and testing revenue. |
E-Commerce
| Amazon (NasdaqGS: AMZN) 2Q22 | |
| Commentary | Amazon reported 7.0% year-over-year revenue growth, in line with 7.0% growth in the prior quarter. The company reported EPS of $(0.20) for 2Q22, compared to $0.76 per diluted share in the second quarter of 2021. Its operating income decreased by 57.1% year over year to $3.3 billion, primarily due to higher freight costs. In Amazon’s retail-related segments, online stores’ sales (representing first-party online sales) declined by 4.0% year over year, physical stores sales increased by 12.0% and third-party seller services sales increased by 9.0%. At constant currency, first-party online sales turned flat year over year; last quarter, Amazon witnessed a 1% constant-currency decline in this segment. Meanwhile, Amazon Web Services (AWS) sales increased by 33.0%, and the company’s advertising business sales increased by 18.0% year over year. During the quarter, the company introduced new fashion shopping experiences for customers, including Virtual Try-On for Shoes, where shoppers can virtually try on thousands of sneaker styles. It also launched Luxury Stores on Amazon in France, Germany, Italy, Spain and the UK, where customers can shop established and emerging luxury fashion brands online. Amazon continued to collaborate with leading retailers and stadiums to equip third-party locations with Just Walk Out technology, enabling shoppers to simply enter a store, take what they want and leave, paying automatically with their Amazon account for a seamless shopping experience. Recent store openings include the Walk-Off Market at T-Mobile Park in Seattle and the Hudson Nonstop store in Nashville International Airport. During the quarter, Amazon opened 12 new Amazon Fresh grocery stores across the US and UK and introduced innovations to improve the shopping experience for customers, including the next generation of Amazon Dash Cart. Amazon Dash Cart is a smart shopping cart that uses computer vision algorithms and sensor fusion to help identify items placed in a cart, so customers can skip the checkout line when they are done shopping. |
| Outlook | The company expects its revenue in the third quarter of fiscal 2022 to be in the range of $125.0–130.0 billion, representing 13.0%–17.0% year-over-year growth and anticipating an unfavorable impact from foreign exchange rates of around 390 bps. Operating income is expected to be at or below $3.5 billion, representing a mid-point range year-over-year decline of 28.6%. The third quarter guidance assumes approximately $1.5 billion in quarter-over-quarter sequential cost improvement in the company’s fulfillment network operations, which it expects will be largely offset by investments in AWS and additional digital content for Prime members. |
Food Retailers
| Albertsons Companies, Inc. (NYSE: ACI) 1Q23 | |
| Commentary | Albertsons Companies’ total revenues increased by 9.4% year over year, versus 10.1% growth in the prior quarter, and its comparable sales increased by 6.8% year over year. Its digital sales increased by 28.0% year over year, while its adjusted EPS increased by 12.4% year over year. The company attributed its second-quarter sales growth to higher fuel sales and an increase in comp sales of 6.8%, with retail price inflation contributing to the comp sales increase. Albertsons’ gross margin declined by 100 bps year over year to 28.1% due to inflationary increases in product and supply chain costs. Membership in the Just for U Loyalty Program—a free customer loyalty program offered by the company that allows participants to receive weekly personalized deals on groceries, earn points on eligible purchases and redeem rewards for discounts on various products—increased by 16.0% year over year to 31 million members. During the quarter, the company ramped up automation in two of its largest distribution centers and expects to continue to roll out similar automation across its network over the next several years. It also started the progressive rollout of a new enterprise-wide warehouse management system, which is expected to be fully implemented by fiscal 2025. According to Albertsons, both these initiatives are expected to improve the ability to differentiate the company’s fresh offerings and improve in-stock levels. The nine brands owned by Albertsons saw strong sales growth in the quarter. Its sales penetration, which measures how much customers use a product or service compared to the total estimated market for that product or service, reached an all-time high of 25.8% in the quarter. The company launched 59 new items during the quarter, including keto options, and it expects to launch a total of 425 new products this year. |
| Outlook | Albertsons raised its comp sales and EPS guidance for fiscal 2023 and now expects comp sales growth in the range of 3.0%–4.0% year over year, compared to its prior guidance of 2.0%–3.0%, driven by continued inflation and market share gains. It expects an adjusted EPS of $2.80–$2.95, compared to $2.70–$2.85, representing a 3.9%–8.8% year-over-year decline. The company continues to expect to spend $2.0–2.1 billion in capital expenditures in fiscal 2023. |
Home and Home-Improvement
| Tractor Supply Company (NasdaqGS: TSCO) 2Q22 | |
| Commentary | Tractor Supply Company reported an 8.4% year-over-year increase in revenue versus 8.3% growth in the prior quarter. Its comp sales increased by 5.5% year over year, while its diluted EPS increased by 10.7% year over year. The company’s second-quarter gross margin declined by 24 bps year-over-year to 35.5% due to product cost inflation and high transportation costs. Management noted that the consumable, usable and edible categories continued to experience strong demand, as the businesses’ growth came in at more than three times the company’s overall sales growth rate. These products are need-based, demand-driven and drive store traffic. In terms of its e-commerce business, the company saw 7.0% year-over-year growth. Meanwhile, sales from its mobile app grew double-digit year over year, representing about 15.0% of the company’s total digital sales. The management noted that the composition of the company’s inventory is in great shape as the company heads into the second half of the year. Still, Tractor Supply Company stated it is pursuing more inventory to improve its in-stock position in some of its categories. During 2Q22, the company opened 13 new stores. |
| Outlook | Tractor Supply Company raised its fiscal 2022 financial outlook and now expects sales to be $13.9–14.1 billion, compared to its previous guidance of $13.6–13.8 billion, representing 6.8%–8.4% year-over-year growth. Comparable sales are expected to grow 5.2%–5.8% year over year, compared to the company’s prior guidance of 3.0%–4.5% growth. It expects its operating margin to be around 10.2%, the midpoint of its prior guidance of 10.1%–10.3%, and it expects its EPS between $9.50 and $9.60, compared to its previous guidance of $9.20–$9.50, representing 6.9%–10.3% year-over-year growth. Tractor Supply Company’s fiscal 2022 calendar consists of 53 weeks, one additional week compared to fiscal 2021. The benefit of the 53rd week is anticipated to be worth around 1.5 percentage points of net sales and a $0.15 contribution to EPS, according to the company. The company targets to open around 70–80 new Tractor Supply stores and 10 new Petsense stores in fiscal 2022. Management stated that, for the fall harvest and Christmas holiday season, the company will leverage an expanded assortment of its garden centers to drive sales. |
Looking Forward
Apparel and footwear brand owners continued to witness solid revenue growth in the latest reported quarter, with Columbia Sportwear Company, Levi’s and Skechers reporting positive sales growth year over year. However, gross margins remain negative for all companies covered, except Levi’s, due to incremental freight costs—although partially offset by price increases. Columbia Sportswear, Skechers and VF Corporation revised down their EPS guidance for their respective fiscal years, while Deckers Outdoor Corporation raised its EPS guidance for fiscal 2023, expecting high-single-digit to double-digit percentage growth year over year. All the companies discussed, except VF Corporation, expect double-digit net sales growth for their respective fiscal years.
CPG company Kimberly-Clark Corporation reported high-single-digit sales growth year over year. For full-year 2022, the company reiterated its sales guidance but raised its comps guidance. It now expects low- to mid-single digit net sales growth year over year and mid- to high-single-digit year-over-year comp growth. The company expects its adjusted operating profits to be down mid-single-digit percent year over year—versus its prior guidance of down low- to mid-single-digit—as it is witnessing higher inbound costs, led by an increase in raw material prices.
Drugstore retailer Walgreen Boots Alliance reported a low-single-digit sales decline year over year. For fiscal 2022, the company maintained its adjusted EPS guidance of low-single-digit growth year over year; however, it raised its guidance for its “base business” from mid- to high-single-digit-growth to high-single-digit growth year over year, reflecting strong US front-of-store sales performance and increased Covid-19 vaccination and testing revenue.
Although e-commerce player Amazon posted high-single-digit sales growth year over year in the latest reported quarter, it witnessed flat growth in its online store segment’s sales. The company expects its year-over-year revenue growth in the third quarter of 2022 to be in double digits. It expects its operating income to be down double-digits year over year due to investments in AWS and additional digital content for Prime members.
In its first quarter of fiscal 2023, food retailer Albertsons Companies posted high-single-digit sales growth year over year. For full-year 2023, the company raised its comp sales and EPS guidance. It now expects comp sales growth of low-single-digit year over year and a low- to high-single-digit year-over-year decline for its EPS.
In the home and home-improvement retail sector, Tractor Supply Company reported another strong quarter with high-single-digit revenue growth year over year and mid-single-digit comparable sales growth. However, its gross margin was impacted by product cost inflation and high transportation costs. For fiscal 2022 the company raised its sales, comp sales and EPS guidance. It now expects high-single-digit year-over-year sales growth, comp sales growth of mid-single-digit year over year, and EPS growth of high-single-digit to double-digits year over year. At the same time, the company continues its plan to expand its store network.