US Earnings Season: Estée Lauder and Analog Devices Lead Gains as Klarna and Lowe’s Slip

Second-quarter earnings reports for major US retailers and technology firms revealed mixed results, underscoring the selective nature of current consumer spending. Estée Lauder shares rose 10% after reporting a return to sales growth and raising full-year guidance, while Analog Devices climbed more than 2% driven by strong data centre and industrial revenue. Conversely, Lowe’s stock fell due to cautious DIY spending outlooks, and La-Z-Boy dropped 17% on weaker-than-expected results. In the technology and fintech sectors, Baidu fell 11% after missing revenue and earnings targets, and Klarna plunged 19% after trimming its gross merchandise volume forecast, despite beating profit expectations.

Estée Lauder delivered a robust turnaround, posting net sales growth of 6% in its fiscal fourth quarter. Revenue reached $3.63 billion, surpassing Wall Street estimates of $3.55 billion, while profits of $0.39 per share beat the consensus of $0.32. The company raised its adjusted operating margin outlook to 12.7% to 13.5% for fiscal 2027, citing strength in its fragrance segment. CEO Stéphane de La Faverie stated the company is delivering on all aspects of its turnaround plan.

In the semiconductor sector, Analog Devices reported third-quarter earnings per share of $3.45, beating the analyst estimate of $3.34. Revenue rose 40% year-over-year to $4.02 billion, led by growth in its data centre and industrial businesses. The chipmaker issued fourth-quarter guidance that topped Wall Street estimates, projecting earnings per share of $3.71 to $4.01 and revenue of $4.2 billion to $4.4 billion.

Home Depot and Target also posted positive results, though with differing consumer dynamics. Home Depot beat estimates as consumers focused on smaller home improvement projects, with same-store sales increasing 1.7%. Target delivered another earnings beat, increasing sales across all merchandise departments and raising its full-year outlook. CEO Michael Fiddelke noted that while the company is encouraged by the strong guest response to recent changes, the goal remains years of sustained top-line growth.

Conversely, Lowe’s faced headwinds in the do-it-yourself segment. Revenue came in at $26 billion, slightly below the $26.1 billion expectation, and same-store sales grew just 0.2% against a 0.7% expectation. The retailer cited pressure in discretionary DIY spending, although its pro business and online transactions helped offset some weakness. La-Z-Boy fared worse, with sales falling 3% to $475.6 million and a GAAP loss per share of $0.06, prompting a 17% drop in after-hours trading.

Technology and fintech firms showed divergent performance. Baidu missed revenue and earnings targets, with second-quarter revenue down 4% year-over-year to RMB 31.33 billion. However, AI Cloud Infrastructure revenue rose 50%, and GPU Cloud revenue surged 283%. Klarna, despite beating profit expectations with earnings per share of one penny, saw its stock plunge 19% after trimming its 2026 gross merchandise volume forecast to between $149 billion and $151 billion.

Broader market sentiment was influenced by recent inflation data that eased expectations for a September interest rate hike. According to FactSet data, second-quarter earnings for S&P 500 companies are on pace to rise 50% year over year, the highest growth rate since 2021. Bank of America strategists noted that artificial intelligence has been the primary growth engine behind this broad-based earnings expansion.