Walmart will report quarterly earnings on Thursday as investors and economists seek clarity on the health of U.S. households and the outlook for the broader economy.
Here's what analysts expect from the big retailer, according to LSEG consensus estimates:
- Earnings per share: 65 cents
- Revenue: 168.53 billion dollars
As the nation's largest retailer, Walmart is uniquely positioned to offer insight into where consumers spend and save. The company's reputation for value has boosted sales over the past two years as inflation has drawn more higher-income shoppers to its stores and website.
Inflation has moderated and returned to historic levels, according to July data from the U.S. Department of Labor. The consumer price index, which measures prices for a broad mix of goods and services, rose 2.9%.% Last month, compared to the previous year, this was the lowest level since March 2021.
However, prices are far above expectations in the pre-pandemic period, frustrating and testing consumers. A jobs report from the Labor Department earlier this month also raised concerns and triggered a sharp sell-off in the stock market as growth slowed and the unemployment rate rose more than expected.
Earnings reports from some companies have raised concerns about the economy. House deposit On Tuesday, it beat quarterly profit and revenue expectations but warned of slow sales in the second half of the year and consumer caution, even among its middle- and upper-income customer base.
Walmart CEO Doug McMillon and CFO John David Rainey have said quarter after quarter that consumer behavior has been consistent, with shoppers seeking value and being selective about how they spend.
Steve Shemesh, a retail analyst at RBC Capital, said he and other investors will be eager to see if that remains the case.
“We will be attentive to any kind of change in tone,” he said.
Walmart, with its reputation for value and massive grocery business, is typically more resilient than its peers in a challenging economy as customers turn to its stores to stretch their dollars when times are tough. The company said in May that it expects to be at or slightly above its full-year guidance, which calls for net sales growth of between 3% and 4% and adjusted earnings per share of between $2.23 and $2.37.
If Walmart disappoints in the quarter, that could set off alarm bells, Shemesh said.
“The broader investment community would interpret this as 'Walmart faces a challenge. Everyone else is likely facing even bigger challenges than it is,'” he said.
On the other hand, he said, investors will have to carefully analyze the earnings report if Walmart beats expectations.
“If Walmart beats expectations, your gut instinct is, 'OK, Walmart beats expectations. The consumer is doing well,'” he said. But, he added, the company's strong performance could be due to even wealthy consumers becoming more dependent on Walmart for a broader range of products.
In addition to appealing to shoppers tired of inflation, Walmart has taken its own steps to boost growth. It has looked beyond traditional retail channels, as it has sought to add more sellers to its third-party marketplace, sell more ads and attract more members to its subscription service, Walmart+. It also launched a new grocery brand, Bettergoods, with most items under $5, including meal solutions like frozen pizzas and chicken wings that could be a cheaper alternative to fast food.
Walmart shares closed Wednesday at $68.66. Year-to-date, the company's stock is up nearly 31%, outpacing the S&P 500's gains of about 14%.
