Jharonne Martis, Director Of Consumer Research At LSEG, explains why retail earnings could get ugly.
Transcript:
CAROLINE WOODS: What’s the takeaway about the consumer right now?
JHARONNE MARTIS: The consumer is watching and is very careful about what is going to happen with the economy. They are very worried about how much their pricing power is going to be, what the value is going to be in terms of, are the prices going to continue to rise inflation. What this means for my cost of living, and therefore they’re being more discerning and more cautious about where they’re spending. So as we see the trade wars continue to progress and see more of the numbers coming in August, then we’re going to see that how things will moderate with the consumer. So far, the LSEG estimate predicts low earnings growth rates for the second half of the year, which is a very big change from the previous two years, where we saw double digit growth in earnings. So we’re seeing a deceleration. And for the very first time, we’re seeing a negative growth for the second, for the second quarter, the first negative showing since the pandemic. So retailers are also being very cautious.
CAROLINE WOODS: So retailers don’t typically report until later in the season. It sounds like we have to prepare for some kind of downbeat news?
JHARONNE MARTIS: Yes, they’ve already been warning us not to expect too much from them. In fact, when we look at our guidance, we have received more negative guidance in terms of earnings expectations outlook and also revenue outlook, more so than we have in previous quarters. And therefore, analysts polled by LSEG correspondingly have been lowering their earnings, their earnings estimates forecast, especially for the second quarter, which is expected to be down 1.7% first negative showing since the pandemic. And then we’re expected to see low single digit growth for the second half of the year, underlining again that the consumer is very much concerned about what’s going to happen with pricing and their very being very value conscious.
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