Sector Spotlight: Retailers see expanded earnings growth

Welcome to the latest edition of “Sector Spotlight,” where The Fly looks at a new industry every week and highlights its happenings.

RETAIL NEWS: Cracker Barrel (CBRL) said on Facebook: “We thank our guests for sharing your voices and love for Cracker Barrel. We said we would listen, and we have. Our new logo is going away and our ‘Old Timer’ will remain. At Cracker Barrel, it’s always been – and always will be – about serving up delicious food, warm welcomes, and the kind of country hospitality that feels like family. As a proud American institution, our 70,000 hardworking employees look forward to welcoming you to our table soon.” President Trump said on social media: “Congratulations ‘Cracker Barrel’ on changing your logo back to what it was. All of your fans very much appreciate it. Good luck into the future. Make lots of money and, most importantly, make your customers happy again!”

Kohl’s (KSS) is asking certain vendors for extra time to settle invoices as the struggling retailer adjusts its payment strategy as part of efforts to execute a turnaround plan, Bloomberg’s Reshmi Basu and Lily Meier reported, citing people with knowledge of the situation. “Kohl’s regularly reviews our work to ensure we are operating as effectively and efficiently as possible,” a company spokesperson told Bloomberg in an email.

President Donald Trump stated in a post to Truth Social: “I am pleased to announce that we are doing a major Tariff Investigation on Furniture coming into the United States. Within the next 50 days, that Investigation will be completed, and Furniture coming from other Countries into the United States will be Tariffed at a Rate yet to be determined. This will bring the Furniture Business back to North Carolina, South Carolina, Michigan, and States all across the Union. Thank you for your attention to this matter!”

EARNINGS RECAP: Ollie’s Bargain Outlet (OLLI), Dicks Sporting (DKS), Victoria’s Secret (VSCO), Dollar General (DG), Burlington (BURL) Build-A-Bear (BBW), Five Below (FIVE), Williams-Sonoma (WSM), Kohl’s all posted a beat and raise quarters in Q2. The following is commentary on these companies.

“We had a very strong second quarter and are operating with the wind in our sails,” said Eric van der Valk, Ollie’s Bargain Outlet president and CEO. “We are driving the business to new heights through improved planning, coordination, and execution across the organization. New store openings, total sales, comparable store sales, and earnings were all ahead of our expectations in the quarter and we are raising our full-year outlook across the board.” Jefferies raised the firm’s price target on Ollie’s to $135 from $111 and kept a Hold rating on the shares. Ollie’s continues to win in closeout, gaining share via accelerated store growth and strong comps, but upside potential looks limited despite the company’s strong execution and positioning given the stock’s “still high” valuation, the analyst told investors in a post-earnings note.

Lauren Hobart, president and CEO of Dick’s, said, “We are very pleased with our strong Q2 results. Our performance shows how well our long-term strategies are working, the strength and resilience of our operating model and the impact of our team’s consistent execution.” JPMorgan raised its price target on Dick’s to $235 from $195 and reiterated a Neutral rating on the shares following the fiscal Q2 report. The company’s business momentum continues and the guidance is “prudent” due to second half of the year uncertainty and lower gross margin on tariffs and promotional uncertainty, the analyst said.

“I am excited to share that our momentum continued building in the second quarter, once again delivering results that beat our sales and operating income guidance. We delivered comparable sales growth in both Victoria’s Secret and PINK, in North America and across the globe, and in our stores and online channels.” said CEO Hillary Super. Barclays increased the firm’s price target on Victoria’s Secret to $27 from $23 and maintained an Overweight rating on the shares. The company reported a fiscal Q2 beat which did not flow through to the reiterated fiscal 2025 earnings outlook, the analyst noted. However, the firm believes Victoria’s brand initiatives are beginning to show progress.

“We are pleased with our strong second-quarter results, including earnings growth that significantly exceeded our expectations,” said Todd Vasos, Dollar General’s CEO. “Looking ahead, we believe we have ample opportunity to drive growth and further improve our operating and financial performance, as we continue to work toward achieving the goals laid out in our long-term financial framework.” Morgan Stanley elevated its price target on Dollar General to $125 from $115 and reaffirmed an Equal Weight rating on the shares. Dollar General is “recapturing a respectable and solid comp and EPS algorithm,” but the firm believes this is largely reflected in its current multiple, the analyst tells investors.

Burlington CEO Michael O’Sullivan stated, “We are pleased with our exceptional performance in Q2. Comparable store sales increased 5%, which was on top of 5% comparable store sales growth in Q2 of last year. We also saw very strong margin and earnings performance.” Telsey Advisory upped its price target on Burlington Stores to $350 from $300 and backed an Outperform rating on the shares. The company reported strong Q2 results, with revenue growth and gross margin expansion outperforming expectations, the analyst tells investors. The firm continues to see the company as a beneficiary in the current climate due to the strength of its off-price model and ability to react to external pressures.

“We are pleased with our record first-half results, driven by continued strong store performance and contribution margins in our Direct-to-Consumer segment, and double-digit revenue growth for our Commercial segment, leading us to raise our revenue and profit guidance for the year,” commented Build-A-Bear CEO Sharon Price John. “Looking ahead, we remain committed to advancing our long-term strategic initiatives, with a particular focus on the global expansion of our partner-operated model. As a result, we have achieved a stronger-than-anticipated pace of new location openings, leading us to raise our net new unit guidance. These efforts continue while navigating the dynamic economic environment”.

Winnie Park, CEO of Five Below, said, “We are excited to deliver second quarter results that exceeded our sales and earnings expectations. These results demonstrate the effectiveness of our strategy and are a testament to the hard work, dedication and tight collaboration of our teams across the company, especially in an ever-changing tariff environment. We have been maniacally focused on executing with excellence, specifically curating Wow! newness in our assortment, simplifying our pricing while maintaining extreme value, improving in-stock levels and optimizing product flow. Importantly, our results demonstrate that our customers are recognizing us as the destination for fun at great value for the KID and the KID in all of us.” Telsey Advisory upgraded the stock to Outperform from Market Perform with a price target of $170, up from $144. The company’s business inflected in the first half of 2025 and the momentum should continue into the second half, the analyst told investors in a research note. The firm added Five Below’s business is being driven by consumers searching for value, gains from the Trump administration’s decision to close the de minimis exemption loophole, and a transformation focused on streamlining and enhancing its assortment and pricing structure.

“We are proud to deliver strong results in the second quarter of 2025, driving a comp of +3.7% with all brands again running positive comps. Additionally, we exceeded profitability estimates with an operating margin of 17.9% and earnings per share of $2.00 with earnings growth of nearly +20%. This growing outperformance was driven by positive comps in both furniture and non-furniture, and strong performance in our retail and ecommerce channels; and has allowed us to raise our guidance on the top-line and reiterate our guidance on the bottom-line, despite continued macroeconomic uncertainty and the tariff environment,” said Williams-Sonoma president and CEO  Laura Alber. Morgan Stanley raised the firm’s price target on Williams-Sonoma to $200 from $185 and reaffirmed an Equal Weight rating on the shares. Management has demonstrated its ability to capture demand and grow share in a stabilizing Home Furnishings backdrop, but “elasticity will be key” in the second half as tariff headwinds are mounting and “substantial policy uncertainty remains,” the analyst said in a post-Q2 note.