The retail industry has rebounded since last year after being hit hard by the COVID-19 pandemic. In fact, the pandemic has prompted retail companies to restructure their outdated supply chains, optimize inventory management, and reinvent their physical stores for the digital age. The omnichannel retail experience has dominated the industry recently, with retail companies increasing their investments in digital capabilities. Advanced technologies including the Internet of Things (IoT), Augmented Reality and Artificial Intelligence (AI) are reshaping the retail industry.
The retail sector is expected to experience significant growth this year, driven by sustained demand for goods and services. Several fundamentally sound retail companies recently released impressive quarterly earnings reports, beating analysts’ expectations. Shares of these retail companies are expected to soar in the near term due to their strong fundamentals, high profit margins and solid growth attributes.
Quality retail stocks Petco Health and Wellness Company, Inc. (WOOF) and Ralph Lauren Corporation (RL) recently posted better-than-expected earnings in the last quarter. Continue reading.
Click here to view our 2022 Retail Industry Report
Petco Health and Wellness Company, Inc. (FRAME)
WOOF, based in San Diego, Calif., is a health and wellness company focused on improving the lives of pets, pet parents, and its Petco Partners. The company offers veterinary care, training, grooming, telehealth, pet health insurance and veterinary services through Vetco mobile clinics. Additionally, it provides pet consumables, supplies and services through its websites Petco.com, petcoach.co, petinsurancequotes.com and pupbo.com. WOOF operates more than 2,500 Petco locations in the United States, Mexico and Puerto Rico.
On May 5, WOOF partnered with Butterfly Network, Inc. (BFLY), a digital health company, to deploy Butterfly iQ+ Vet to WOOF’s growing network of near-full-service veterinary hospitals in point-of-care facilities for petco pets. “The single-probe, whole-body technology of the Butterfly iQ+ Vet System will equip our veterinarians with ultrasound imaging that will help speed diagnoses and improve health outcomes,” said Dr. Whitney Miller, Chief Veterinarian of WOOF.
WOOF’s net sales increased 4.3% year-over-year to $1.48 billion in the first quarter of Fiscal 2022, ended April 30, 2022. Its operating profit increased 4.6% year-over-year to reach $49.94 million. Its adjusted EBITDA improved 5.4% year-over-year to $132.55 million. In addition, the company’s net earnings and net earnings per Class A and B-1 common share were $23.80 million and $0.09, respectively, registering an increase of 287.1% and 200% year over year.
WOOF posted better first-quarter revenue and profit than Wall Street expected. The company’s revenue was $1.47 billion, beating Wall Street’s estimate of $1.45 billion. Additionally, WOOF’s same-store sales growth was 5.1%, up from the consensus call of 2.8%. Its adjusted EPS was 17 cents per share, while analysts polled by FactSet expected 15 cents per share.
Analysts expect WOOF’s revenue for its third quarter of fiscal 2023, ending October 31, 2022, to be $1.56 billion, indicating a 7.9% increase from one year to the next. Additionally, the consensus EPS estimate of $0.25 for the same quarter represents a 22.8% increase over the same period last year. WOOF has exceeded consensus estimates for revenue and EPS in each of the past four quarters.
Shares of WOOF have gained 10.9% over the past five days and closed Friday’s trading session at $16.46.
WOOF’s POWR ratings reflect this promising outlook. POWR ratings rate stocks on 118 separate factors, each with its own weighting. The stock has a B grade for quality.
Within the consumer goods industry, it is ranked No. 29 out of 61 stocks. To view additional POWR (Growth, Stability, Sentiment, Value, Quality, and Momentum) ratings for WOOF, click here.
Ralph Lauren Company (RL)
RL in New York designs and distributes lifestyle products in North America, Europe, Asia and internationally. The company offers apparel, accessories, home products and fragrances. RL operates over 548 retail stores, 650 stores in concession stores, 139 Ralph Lauren stores and 143 Club Monaco stores through licensed partners.
On March 15, RL introduced a new limited-edition collection that builds on its historic partnership with Morehouse College and Spelman College. The collection expresses the vibrant history, deep-rooted sense of community, and legacy of timeless clothing at historically black colleges and universities. This launch could increase the company’s market reach and sales.
During its fourth quarter of fiscal 2022, ended April 2, 2022, RL’s net revenue increased 18.3% year-over-year to $1.52 billion, and its gross profit increased 23 .4% year-on-year to $966.10 million. Its operating profit rose 243.2% from the prior year period to $36.80 million. The company’s net earnings and net earnings per common share were $24.40 million and $0.34, respectively, up 132.9% and 133.7% year-on-year. the other.
RL recently released results for the fourth quarter of fiscal 2022, beating consensus estimates. The company’s adjusted net earnings per share came in at 49 cents per share, while analysts polled by FactSet had expected 36 cents per share. Additionally, RL recorded revenue of $1.52 billion, beating expectations of $1.46 billion.
The consensus revenue estimate of $6.74 billion for its fiscal year 2024, ending in March 2024, represents growth of 5.1% over the previous year. The consensus EPS estimate of $9.50 for next year represents a 12.6% year-over-year increase. The company has an impressive revenue and profit history; it has exceeded consensus estimates for revenue and EPS in each of the past four quarters.
Over the past five days, the stock price has improved 6.5% and closed Friday’s trading session at $98.87.
RL’s strong fundamentals are reflected in its POWR ratings. The stock has a B rating for quality and value. Within the B-rated fashion and luxury industry, it is ranked No. 27 out of 68 stocks.
To view additional POWR (stability, growth, momentum and sentiment) ratings for RL, click here.
Click here to view our 2022 Retail Industry Report
WOOF shares were flat in premarket trading on Tuesday. Year-to-date, WOOF is down -16.83%, compared to a -12.30% rise in the benchmark S&P 500 over the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions. After…