Earnings This Week: Tesla deliveries, Tesco and Boohoo

Corporate earnings calendar: October 2 – 6

It is the quiet before the storm for the corporate calendar, with attention starting to shift to the next earnings season that will kick off in mid-October. The US is quiet as a result, but we could see Tesla gain some attention at the start of the week as it may report delivery numbers over the weekend.

The UK calendar is headlined by results out from the country’s largest supermarket chain Tesco. Updates from baker Greggs, online clothing firm Boohoo and pub chain Wetherspoons are on also on the radar.

Below is a calendar outlining all the key earnings we are watching this week.

Tesla stock: Q3 delivery preview

Tesla is expected to report third-quarter delivery figures over the weekend ahead of results out later in October, although Tesla does not confirm when the numbers will come out. If so, Tesla will certainly be on the move when markets get the chance to react on Monday.

The world’s most valuable automaker is expected to have delivered 457,795 vehicles in the third quarter, according to the latest consensus figures from Bloomberg. However, it is important to note that estimates have been revised lower and that downgrades have accelerated in recent days considering estimates pointed to deliveries of over 460,000 at the start of the week.

Several analysts have warned deliveries could still miss expectations. The consensus suggests Tesla is already expected to report a sequential drop in sales and snap the momentum that has built this year, and a miss would only exacerbate that fall.  Barclays, Baird and Guggenheim are among those anticipating a miss, with estimates ranging between 439,000 to 455,000. 

Notably, analysts have said any shortfall could be down to downtime and upgrades at its factories, and because it has had to shift resources to its new Model 3 and the Cybertruck. Still, the fear will be that markets will see any miss as a sign demand is weakening, which could stoke concerns that more price cuts will be needed to shift its cars, in turn hurting sentiment around its profitability and earnings.

Tesco share price: H1 earnings preview

Tesco’s scale and focus on value is paying off. The supermarket chain continues to grow sales as consumers spend more of their cash on necessities like food, and it is expected to have grown margins and profits despite inflationary pressures on the likes of wages and energy.

Statutory revenue is expected to grow 7.4% from the year before to £34.85 billion, with retail like-for-likes forecast to climb by the same percentage, led higher by its core UK business (+8.7%) and wholesale Booker (+9.1%). Notably, that will be mainly driven by price rather than volumes. Growth in Central Europe is expected to be more tepid at just 1.1%.

Adjusted operating profit is predicted to rise 8.1% from last year to £1.421 billion. That will be mostly driven by Tesco Bank. Adjusted retail operating profit – which better reflects profitability of its grocery operations – is expected to climb by a more tepid rate of 2.3% to £1.345 billion. Tesco has said it aims to keep adjusted retail operating profit flat over the full year, suggesting margins could contract in the second half. The hope will be that easing inflation will provide some relief.

Tesco is expected to generate £859 million in retail free cashflow, down about one-third from last year but still high enough to cover its dividend and buybacks. It is aiming to deliver £1.4 billion to £1.8 billion over the full year, with that wide range providing scope for it to be narrowed at some point.

Boohoo share price: H1 earnings preview

Boohoo has promised to return to profitable growth in the second half of 2023. That means results will be uninspiring when it releases first half results and pushes the onus onto the outlook.

Let’s start with the first half. Revenue is forecast to fall 12.6% to £771.1 million, in the middle of its guidance for a 10% to 15% drop as sales contract in all its markets. That, in turn, is expected to lead adjusted Ebitda – its headline earnings measure – down 10.2% to £31.9 million. Boohoo is seen turning to an adjusted pretax loss of £12.7 million from the small profit delivered the year before.

Commentary around inventory could be a good indicator of how much progress it is making. Boohoo made a big dent last year as it tries to become faster and leaner. Athleisure giant Nike won applause this week after reducing inventories more than expected, and Boohoo could see a similar benefit if it can impress on this front. Inventories are significant as they have a big impact on profitability and cashflow.

The weak performance in the first half will only raise pressure on the second. Boohoo has said it is aiming to deliver flat to 5% growth in sales and increase adjusted Ebitda over the full year. That suggests it has a mammoth turnaround to deliver considering the sharpness of the falls in sales and earnings forecast in the first.

Any beat in the first half would raise confidence it can meet guidance in the second, while any softness in the results may cast doubt over its outlook. Either way, Boohoo needs to reiterate its full year targets to avoid upsetting the markets. The worry for investors will be how the deterioration in the economic outlook, as well as increasing competition from foreign and domestic rivals, will impact Boohoo’s recovery.

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