Walmart and Target kick off big retail earnings week

walmart (WMT) and Target (TGT) kicks off a big week for retail revenue. Others to report during the week include Lowe’s (DOWN), TJX (TJX), Ross Stores (ROST) and Walmart’s Dow Jones Peer Home deposit (HD). Financial reports from Walmart and Target come as big box executives navigate shifts in consumer spending amid rising interest rates.


The annual inflation rate in July fell to 8.5% from 9.1% in June. The deceleration is largely due to lower gasoline prices, but federal data shows the price of food and other goods is still on the rise.

Previously, Walmart and Target lowered their second-quarter forecasts to reflect economic concerns. Retail inventories fell sharply in late July after Walmart cut its profit outlook amid efforts to cut prices and remove unsold inventory from its shelves.

The move came as clients recalibrated their budgets to absorb heartbreaking levels of inflation. As consumers shift spending more to cover rising food prices, Walmart said it expects a tougher time for its general merchandise segment for the rest of the year.

best buy (ABY), dollar tree (DLTR) and General dollar (DG) were among other retail stocks that fell in Walmart’s outlook.

Retail inventory: Walmart earnings

Estimates: Analysts are predicting a roughly 9% drop in Walmart’s earnings to $1.62 a share in the quarter. Analysts’ revenue target is $150.9 billion, up 7%.

Results: Come back Tuesday morning.

Shares of Walmart added 0.4% to 132.77 during Monday’s market trading. The stock is back above support at its 10-week moving average as it attempts to break out of a four-month consolidation, according to MarketSmith analysis.

In its July 25 earnings warning, Walmart said it expects full-year adjusted earnings per share to fall 11% to 13%, down from a May forecast of a decrease of about 1%. Analysts forecast full-year earnings of 5.69% per share, down 11.9%.

For the second quarter, the big-box retailer forecasts an 8-9% decline in earnings per share. In May, Walmart said it expected earnings to be “flat to slightly higher.” Earnings per share guidance in May was already downgraded from the guidance offered in February.

Is Walmart Buy or Sell Right Now?

Walmart also said it expects net sales growth of about 7.5% in the second quarter. This was better than a forecast in May for an increase of “more than 5%”.

“Rising levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress eliminating hard categories, apparel at Walmart US requires more markdown dollars,” CEO Doug McMillon said in a statement.

Walmart stock has a composite rating of 49 out of 99. It has a relative strength rating of 34, an IBD proprietary stock check gauge for stock price movement with a score of 1 to 99. The rating shows how a stock’s performance over the past 52 weeks holds up against all other stocks in IBD’s database. The EPS of the stock is 69.

Target earnings

Estimates: Wall Street predicts Target will earn 79 cents per share on $26 billion in sales.

Results: Check Wednesday before the market opens.

The Target stock gained 0.4% to 173.13 early Monday. The target stock has moved back above the 10-week support with a four-month consolidation.

In early June, Target lowered its second quarter forecast. The Minneapolis-based company cut its second-quarter operating margin forecast to 2% from 5.3%.

The company also announced that it was planning price increases to deal with “unusually high transportation and fuel costs.” Additionally, Target also announced plans to eliminate excess inventory and cancel orders before the end of the second quarter.

“While these decisions will result in additional costs in the second quarter, we are confident that this rapid response will pay off for our business and our shareholders over time, resulting in improved profitability in the second half and beyond. “, CEO Brian Cornell said at the time.

Target made the decisions after it missed earnings estimates, guided earnings lower and reported large inventories of unsold goods in the first quarter. These results sent Target stock to its lowest level since September 2020.

Target is third, behind Walmart and Costco (COST), in the Large Retail Chains industry group. The stock has a composite rating of 48. Its relative strength rating is 13 and its EPS rating is 82.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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