Earnings Watch: Parade of retailers to face inflation doubts while Nvidia and Zoom answer questions about tech

by | May 21, 2023 | Stock Market

Last week, retailers Walmart Inc., Target Corp. and Home Depot Inc. provided broad strokes on how rising prices for essentials have reshaped consumer habits. Now come the finer points, with a whole lot of other retailers — including Dollar Tree Inc.
Costco Wholesale Corp.
Best Buy Co. Inc.
Gap Inc.
and Ulta Beauty Inc.
— reporting results this week.

Those results will offer more context on low-income and middle-income shoppers, who have struggled more under the weight of food-price increases, and the broader hunt for discounts. They’ll also color the gaps on demand for clothing, which has suffered as those food prices have risen, and electronics, which have seen a similar exodus after customer maxed out during the pandemic. Health and beauty products, meanwhile, have held up, as people get back out into the world. The retail earnings dump for the quarter begins on Tuesday, with Lowe’s Cos.
BJ’s Wholesale Club Holdings Inc.
AutoZone Inc.
Dick’s Sporting Goods Inc.
Urban Outfitters Inc.
and Williams-Sonoma Inc.
reporting results. Results from Express Inc.
Kohl’s Corp.
Abercrombie & Fitch Co.
and American Eagle Outfitters Inc.
arrive Wednesday. Burlington Stores Inc.
Build-A-Bear Workshop Inc.
Best Buy, Dollar Tree, Ulta, Costco and Gap are expected to report Thursday. Big Lots Inc.
rounds out the week on Friday. Retailers’ fortunes over the past year have largely hinged on groceries, as higher prices have boosted sales. But as stores keep those prices high, and raise questions about whether those higher prices are profit-driven at this point, consumers have struggled to keep up. Demand for clothing, electronics and home goods and other purchases — which can deliver greater margins, but aren’t things people have to buy every week — have also suffered in the process. Don’t miss: Walmart CEO on higher costs for basics — ‘We all need those prices to come down’ Executives at Walmart
which sells a bunch of groceries and a bit of everything else, said last week that more wealthy shoppers, seeking cheaper purchases, were trickling in to their stores. But they said rising prices for some groceries and other essentials had become a more trenchant problem for customers living paycheck to paycheck, who are in year No. 3 of trying to find ways to make ends meet amid stubborn inflation. “The persistently high rates of inflation in these categories lasting for such a long period of time are weighing on some of the families we serve,” Walmart Chief Executive Doug McMillon said. “This stubborn inflation in dry grocery and consumables is one of the key factors creating uncertainty for us in the back half of the year because of the cumulative impact on discretionary spending in other categories, specifically, general merchandise,” he continued. That problem is even bigger for Target
and other retailers that depend on sales of more discretionary goods, such as furniture, clothes and electronics. Target executives are dealing with an unstable margin profile that could be an issue for many other retail executives, with Target’s leaders deciding to point their fingers at organized theft. In-depth: Retailers say theft cost nearly $100 billion last year. But are stores using crime stats to cover up other problems? Still, as with signs of easing anxiety over inflation, a FactSet analysis of first-quarter earnings calls found that the word “recession” came up less frequently, and that the number of S&P 500 companies talking about one has fallen for the third straigh …

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