This Morning’s Earnings Prove That Increased Consumer Confidence Does Not Equal Sales Growth For All Retailers

Home Depot (HD) reported earlier today, with EPS for Q4 coming in at $1.00, topping both the Estimize and Wall Street consensus by a large margin and growing 37% over Q4 2013. In fact, the $0.11 beat against the Street was the largest beat by the home improvement retailer in over 15 years. Revenues were equally as impressive at $19.16B vs. the Estimize consensus of $18.73B, increasing 8% YoY.  This bodes well for Lowe’s which will report tomorrow.

Also this morning, we continued to see disparities in the restaurant industry, with Domino’s (DPZ) releasing disappointing bottom-line results and Cracker Barrel putting up extremely impressive numbers. Domino’s EPS for Q4 settled at $0.91, three pennies shy of the Estimize consensus. Despite the profit miss, the company was able to post revenue of $643M, $25M ahead of the Estimize prediction. Top-line results were driven by stronger sales at home and a push to expand overseas, while margins suffered as the company struggled to expand domestically due to stiff competition in the pizza delivery space.

Cracker Barrel (CBRL) on the other hand posted EPS of $1.93, well ahead of the Estimize consensus of $1.61 and the Wall Street consensus of $1.60, growing 24% YoY. Revenues also came in better-than-expected at $756 vs. $732M from Estimize. The company saw increased traffic in the fourth quarter due to mild weather and low gasoline prices which encouraged consumer spending. As a result, the casual dining company now expects fiscal 2015 EPS in the range of $6.40 – $6.50 in comparison to the previous forecast of $5.95 – $6.10.

Lastly, Macy’s (M) , the second largest multi-line retailer in the S&P 500, posted weaker-than-expected results for the most recent quarter. Earnings per share of $2.44 missed the Estimize consensus by a penny, but managed to narrowly beat the Street’s expectation by the same amount. Revenues of $9.36B fell short of both estimates. Despite a more confident U.S. consumer that has more discretionary income to allocate, Macy’s suffered from sluggish holiday sales as more people choose to spend on electronics, autos and healthcare. As a result, the retailer’s 2015 outlook is for EPS in the range of $4.70 – $4.80, the top end of which misses analysts’ predictions by about $0.05.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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