Walmart will report quarterly earnings on Thursday as investors and economists seek clarity on the health of US households and the outlook for the broader economy.
Here’s what analysts expect for the big box retailer, according to consensus estimates from LSEG:
- Earnings per share: 65 cents
- Annuity: $168.53 billion
As the nation’s largest retailer, Walmart is uniquely positioned to provide insights into where the consumer spends and spends. The company’s reputation for value has boosted sales over the past two years as inflation has driven more higher-income shoppers to its stores and website.
Inflation moderated and returned to historic levels, according to July data from the US Labor Department. The consumer price index, which measures the prices of a broad mix of goods and services, rose 2.9% last month compared to a year earlier. This is the lowest level since March 2021.
However, prices are fluctuating much higher than before the pandemic, frustrating and straining 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. Home Depot On Tuesday it beat quarterly profit and revenue expectations, but warned of sluggish sales in the last half of the year and consumer caution, even among its more middle- and upper-income customer base.
Walmart CEO Doug McMillon and CFO John David Rainey said quarter over quarter that consumer behavior was consistent as shoppers look for value and are selective about how they spend.
Steve Shemesh, retail analyst at RBC Capital, said he and other investors will be eager to hear if that’s still the case.
“We’ll be looking for any kind of change in tone,” he said.
Walmart, with its reputation for value and its massive grocery business, is typically more resilient than its peers in a tough economy, as customers will turn to its stores to stretch their dollars when times are tight. 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 3% to 4% and adjusted earnings per share between $2.23 and $2.37 .
If Walmart disappoints in the quarter, that could raise alarm bells, Shemesh said.
“The broader investment community would see this as ‘Walmart is in question. Everyone else is likely to face an even bigger challenge than that,” he said.
On the other hand, he said, investors should scrutinize the earnings report if Walmart beats expectations.
“If Walmart comes knocking, your instinct would be to say, ‘OK, Walmart comes knocking. The consumer is fine,” he said. However, he added, the company’s strong performance could come from even affluent shoppers who are more dependent on Walmart for a wider variety of merchandise.
Along with attracting shoppers strained by inflation, Walmart has made its own moves to spur growth. It’s looking outside traditional retail channels as it seeks to add more sellers to its third-party marketplace, sell more ads and attract more members to its subscription service, Walmart+. It’s also launching 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. So far this year, the company’s stock is up nearly 31%, outpacing the S&P 500’s roughly 14% gain.
