Bill Peters
Earnings Watch: Many retailers including Best Buy, Costco and Gap are due to report after Walmart warned that higher grocery prices were hurting customers’ purchases at other stores. , big tech companies are also participating in the parade
Retailers Walmart, Target and Home Depot last week outlined how high prices for essentials have changed consumer habits.
Then there are the finer points with many other retailers such as Dollar Tree Inc. (DLTR), Costco Wholesale Corp. (COST), Best Buy Co. Inc. (BBY), Gap Inc. (GPS), and Ulta. Continue. Beauty Inc. (ULTA) — Here are this week’s results.
These results will provide more context for low- and middle-income shoppers struggling under the weight of rising food prices and the pursuit of widespread discounts. It will also fill a gap in demand for clothing, which has been hit by soaring food prices, and electronics, which has seen a similar outflow as the pandemic has pushed customers to their limit. Meanwhile, health and beauty products are holding up as people return to society.
The dump in retail earnings for the quarter began Tuesday, with Lowe’s Cos. (LOW), BJ’s Wholesale Club Holdings Inc. (BJ), AutoZone Inc. (AZO), Dick’s Sporting Goods Inc. (DKS) and Urban Outfitters Inc. ( URBN) and Williams-Sonoma Inc. (WSM) report the results. Results from Express Inc. (EXPR), Kohl’s Corp. (KSS), Abercrombie & Fitch Co. (ANF), and American Eagle Outfitters Inc. (AEO) arrive Wednesday.
Burlington Stores (BURL), Bill-A-Bear Workshop (BBW), Best Buy, Dollar Tree, Alta, Costco and Gap will report on Thursday. Big Lots Inc. (BIG) wraps up the week on Friday.
The fortunes of retailers have largely hinged on food over the past year, as higher prices boosted sales. But consumers are struggling to keep up, as stores keep their prices high, and the question is now whether those high prices are in pursuit of profit. In the process, demand for items such as clothing, electronics and household goods, which could also bring in greater profits, are also taking a hit as they are not something people have to buy every week.
Don’t Miss: Walmart CEO Talks About Rising Prices on Essentials — ‘We All Need to Bring These Prices Down’
Executives at Walmart (WMT), which sells bulk groceries and everything else, said last week that wealthy shoppers were trickling into stores looking for cheaper deals. But for customers living paycheck-to-paycheck as they enter their third year trying to find ways to make ends meet in stubborn inflation, rising prices on some groceries and other necessities are more likely than not. They said it was a serious problem.
“Inflation remains high in these categories for an extended period of time, putting a strain on some of the households we serve,” said Walmart CEO Doug McMillon. Stated.
“This stubborn inflation in dry food groceries and consumables will be one of the key sources of uncertainty for us in the second half of the year due to its cumulative impact on discretionary spending in other categories, particularly general commodities,” he said. It is one,” he continued.
The problem is even more acute for Target (TGT) and other retailers that rely on selling more discretionary items such as furniture, clothing and electronics. Target executives have decided to take systematic theft seriously as they grapple with volatile profit margins that could be a problem for many other retail executives.
Details: Retailers say nearly $100 billion was stolen last year. But are stores using crime statistics to cover up other problems?
Still, similar to signs of easing inflation fears, a FactSet analysis of first-quarter earnings calls found the word “recession” to appear less frequently and the number of S&P 500 companies talking about it for the third straight quarter. was found to be decreasing. .
Earnings this week
Thirteen S&P 500 companies are due to report results this week, according to FactSet. Retailers aside, cybersecurity firm Palo Alto Networks (PANW) reported this week. So are workplace management software providers Workday Inc. (WDAY) and his Splunk Inc. (SPLK). Toronto-Dominion Bank (TD.T) also reported.
Calls to put on your calendar
The Nvidia and AI frenzy: A lackluster sales outlook and restrictions on sales in China weighed on Nvidia Inc (NVDA) last year, but the chipmaker’s shares, announced Wednesday, are headed into full swing last week. It reached its highest level since 2021. Launching new, cheaper game cards and corresponding tech giants bracing for his AI investment onslaught. For Nvidia, some analysts say AI spending will be a windfall. “ChatGPT sparked a sense of crisis that some have dubbed the ‘iPhone moment of AI.’ AI models continue to grow and proliferate. It will continue to be a cornerstone of the AI ecosystem that does business,” Oppenheimer analysts said in a research note last week. The call may have more specifics behind the bright speculation.
Notable numbers:
The battle of Zoom sales and remote work: Last week, Tesla (TSLA) CEO Elon Musk announced that while other employees who make the products people consume can’t work from home, office workers can’t work from home. said it was “morally wrong” to work from home. . Video calling platform Zoom Video Communications (ZM) reported results on Monday, Wall Street said between bosses trying to get employees back in the office and employees wanting to save on long commutes and other sources of information. will give us a clearer understanding of the struggle between Fear of the office. Once the go-to medium for business meetings, Zoom is poised to become more than just a video conferencing site as pandemic emergency measures are a thing of the past. But the company has experienced significant job cuts in what its CEO described as “aggressive growth.” And investors still need convincing — the stock is down 23.7% over the past 12 months.
-Bill Peters
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(Closed) Dow Jones Correspondence
05/22/23 0816ET
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