Looking back on non-discretionary retail stocks' Q4 earnings, we examine this quarter's best and worst performers, including Sprouts (NASDAQ:SFM) and its peers.

Food is non-discretionary because it's essential for life (maybe not those Oreos?), so consumers naturally need a place to buy it. Selling food is a notoriously tough business, however, as the costs of procuring and transporting oftentimes perishable products and operating stores fit to sell those products can be high. Competition is also fierce because the alternatives are numerous. While online competition threatens all of retail, grocery is one of the least penetrated because of the nature of the product. Still, we could be one startup or innovation away from a paradigm shift.

The 8 non-discretionary retail stocks we track reported a decent Q4; on average, revenues were in line with analyst consensus estimates. while next quarter's revenue guidance was 0.8% above consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, though the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and non-discretionary retail stocks have held roughly steady amidst all this, with share prices up 0.2% on average since the previous earnings results.

Sprouts (NASDAQ:SFM)

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.

Sprouts reported revenues of $1.70 billion, up 7.7% year on year, in line with analyst expectations. It was a very strong quarter for the company, with optimistic earnings guidance for the full year.

"Our fourth quarter performance demonstrates our continued strength as a leading specialty grocer," said Jack Sinclair, chief executive officer of Sprouts Farmers Market.

The stock is up 15.2% since the results and currently trades at $61.88.

Is now the time to buy Sprouts? Access our full analysis of the earnings results here, it's free.

Best Q4: Walmart (NYSE:WMT)

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Walmart reported revenues of $173.4 billion, up 5.7% year on year, outperforming analyst expectations by 2.4%. It was an impressive quarter for the company, with revenue, gross margin, and EPS exceeding expectations. That performance was driven by beats in its U.S. and International Walmart operations. 

Walmart pulled off the biggest analyst estimates beat among its peers. The stock is up 5.3% since the results and currently trades at $59.8.

Is now the time to buy Walmart? Access our full analysis of the earnings results here, it's free.

Weakest Q4: Dollar General (NYSE:DG)

Appealing to the budget-conscious consumer, Dollar General (NYSE:DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Dollar General reported revenues of $9.86 billion, down 3.4% year on year, in line with analyst expectations. It was a mixed quarter for the company, with same-store sales, revenue, and EPS slightly topping analysts' expectations. On the other hand, its gross margin missed analysts' expectations. Guidance was also underwhelming, with the company lowering its sales growth and EPS outlooks, both of which came in below Consensus.

Dollar General had the slowest revenue growth in the group. The stock is down 8.7% since the results and currently trades at $144.3.

Read our full analysis of Dollar General's results here.

Costco (NASDAQ:COST)

Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.

Costco reported revenues of $58.44 billion, up 5.7% year on year, falling short of analyst expectations by 1.2%. It was a solid quarter for the company, with an impressive beat of analysts' gross margin estimates and a narrow beat of analysts' earnings estimates. On the other hand, its revenue unfortunately fell short.

Costco had the weakest performance against analyst estimates among its peers. The stock is down 8.8% since the results and currently trades at $716.36.

Read our full, actionable report on Costco here, it's free.

BJ's (NYSE:BJ)

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

BJ's reported revenues of $5.36 billion, up 8.7% year on year, falling short of analyst expectations by 0.7%. It was a weaker quarter for the company, with underwhelming earnings guidance for the full year and a miss of analysts' gross margin estimates.

The stock is up 5.4% since the results and currently trades at $76.2.

Read our full, actionable report on BJ's here, it's free.

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