Retail Stocks Jumped. Thank Shopify’s Earnings.

Costco provided markets with even more evidence of consumer resilience. (FREDERIC J. BROWN/AFP via Getty Images)

Retail stocks jumped on Wednesday, buoyed by surprisingly strong earnings reports from Shopify and Capri Holdings that suggest the consumer environment isn’t as bleak as many companies expected earlier in the year.

Both Shopify and Capri topped second-quarter earnings and sales expectations and issued upbeat commentary about customer demand.

“We haven’t seen any drops in U.S. demand, whether inbound, outbound, or local,” said Jeff Hoffmeister, Shopify’s chief financial officer, echoing what other e-commerce companies, including Amazon.com and eBay, said last week.

In fact, Hoffmeister added, U.S. sales accelerated in the second quarter, even though many of Shopify’s merchants have raised prices. Shopify’s total revenue rose 31% year over year to $2.7 billion in the quarter, driven by outperformance in North America and Europe.

Capri CEO John Idol said the company’s brands saw “much better sell-through on new product and full-price product.”

“The customer, while they’re very discerning, and yes, they are looking very closely at pricing, they definitely want newness,” he said. “So our full-price new product sell-throughs are up double digit, and that’s right across the group. So that’s a very good sign.”

Both companies’ performance lifted their shares. Shopify stock gained 22% on the day, its highest close since November 2021. Capri shares were up 15%.

Other retailers also got a boost: Amazon and Walmart closed 4% higher, Target gained 2.9%, and Costco Wholesale 2.6%.

Costco provided markets with even more evidence of consumer resilience after the market close. The company’s sales rose 8.5% year over year in July to $20.9 billion, accelerating from June’s 8% annual increase.

Total company same-store sales, which measure sales growth at stores that have been open for more than a year, grew by 6.4% from last year, compared with a 5.8% increase in June. Comparable-store traffic was up 4.3% in the U.S. throughout the month, the company said.

Online sales were also strong, with e-commerce same-store sales jumping 15%. Costco, like other retailers with an e-commerce presence, likely benefited from July’s Prime Day festivities, which drove $24.1 billion in online spend across U.S. retailers, according to Adobe.

Write to Sabrina Escobar at sabrina.escobar@barrons.com