Walmart (WMT) – Get Report will lead a quartet of big retail earnings this week with its July quarter update on Tuesday as investors look for signs of consumer strength heading into the autumn months and the impact of child tax credit payments on back-to-school sales.
“We expect 2Q retail earnings to be characterized by strong comps on a two year basis, improved cadence in July and a positive overall revision to 2021 earnings estimates,” JPMorgan analysts said in a recent client note. “That said, quarterly topline momentum continues to moderate while gross margin pressures are rising .. later-cycle signs which typically are not favorable for retail stock performance.”
Walmart is expected to post earnings of $1.56 per share for the three months ending July before the market opens Tuesday, a figure that would be down 13 cents from the previous quarter but largely flat to last year’s tally. Group revenues are forecast to come in at $136.83 billion, modestly lower than last year’s $137.75 billion total, as the easing of pandemic restrictions on small businesses, and freer consumer mobility over the spring and summer months sends shoppers to rival retailers.
Same-store sales in the United Sates are expected to rise 4% from last year, slowing from 6% in the previous quarter but paced by improving grocery sales, while e-commerce sales are likely to rise by 16.3%.
Walmart’s ‘low single digit’ forecast for fiscal 2022 sales will also be in focus, as will its recently-improved earnings estimate of a ‘high single digit’ growth rate.
Walmart shares were marked 0.1% lower in pre-market trading Monday to indicate an opening bell price of $149.55 each, a move that would nudge its year-to-date gain to around 3.8%.
Target (TGT) – Get Report, which reports before the bell Wednesday, is looking to post July quarter earnings of $3.42 per share, a 4 cent increase from the same period last year, on revenues of $25.1 billion.
In contrast to Walmart, apparel sales are likely to boost both U.S. comps, which are forecast to rise 7.6% from last year — largely in-line with the retailer’s May guidance — and e-commerce growth of around 18%.
Target shares were seen 0.1% lower at $261.50, but are up more than 48% for the year with a market value of nearly $130 billion.
In the home improvement space, Home Depot (HD) – Get Report is expected to post July quarter earnings of $4.43 per share before the market opens on Tuesday, a firm move higher from both its first quarter tally and last year’s bottom line of $4.02, while revenues rising 7.05% to $40.73 billion as home owners continue to pour cash into existing properties amid record-high house prices.
Lowe’s Companies (LOW) – Get Report, meanwhile is likely to see a modest decline in overall sales, to $26.8 billion, even as earnings rise 25 cents from last year to $3.99 per share when it reports before the bell on Wednesday.
“We expect Lowe’s, Target, and Walmart to raise annual guidance but Home Depot doesn’t currently have formal guidance (and we don’t expect them to provide it),” JPMorgan said. “Most importantly, we continue to believe that it is all about
‘proving’ the ability to grow EPS in 2022, which is not a low bar as we lap
stacked stimulus and the expectation for lower savings levels.”
Home Depot shares, which are up 25% for the year, were little-changed in pre-market trading at $331.32 each while Lowe’s was marked unchanged at $190.51 each, holding its year-to-date gain at 18.7%.
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