When Walmart Inc. and Target Corp. report quarterly results, analysts expect to see evidence of consumer needs massively eclipsing consumer wants, even as signs emerge that corporate America is growing less worried about inflation.<\/p>\n
The results from Walmart \u201cOverall, we generally expect a difficult start to the year, mainly driven by ongoing headwinds in discretionary categories partially offsetting continued robust momentum in grocery,\u201d retail-store analysts at Oppenheimer said in a research note on Wednesday. <\/p>\n Target, which reports results Wednesday, has more exposure to the former, Walmart, which reports Thursday, sells more of the latter. <\/p>\n Opinion:\u00a0Rate hikes haven\u2019t brought inflation down to the Fed\u2019s 2% target. Here\u2019s what the central bank could do next.<\/strong><\/p>\n The Oppenheimer analysts said that Walmart was still cutting prices on offerings like clothing and TVs, but said grocery demand and market-share gains for the big-box chain would likely help its results. For Target, they said \u201csluggish\u201d sales were likely for the quarter, as weaker demand for home goods, apparel and consumer electronics work as a counterweight against a better showing in its store\u2019s food, beverage and beauty aisles.<\/p>\n For home-improvement chain Home Depot, which reports on Tuesday, Oppenheimer analysts, in a separate note, said that new home sales in March were improving, and said that wetter, colder weather that month could propel extended demand for gardening supplies. However, they said lower lumber prices could be a drag on same-store sales. <\/p>\n Still, JPMorgan analysts have said that \u201cthe forest looks darker\u201d for consumer spending. And data from Placer.ai, a foot-traffic analytics firm, shows that for the first four months of this year, consumer visits to Walmart, Costco and BJ\u2019s Wholesale Club were largely down from last year. <\/p>\n Target, at least through January and February, was the outlier to that trend, before visits slipped into negative territory. The firm said seasonal trends \u2014 namely, a drop-off from the holiday-season surge \u2014 and more conservative consumer budgeting could be partly responsible for the slump. But they also said that consumers\u2019 visits to those stores were getting longer. <\/p>\n \u201cThe increase in median dwell time indicates that \u2014 although consumers may be visiting these chains less frequently \u2014 they seem to be doing more with each visit by filling larger carts and drawing out the time between each visit to save on gas costs,\u201d Placer.ai said.<\/p>\n Food prices are still rising, and were up 7.7% last month. However, D.A. Davidson analysts said that while the rate at which prices was moderating, prices were still \u201cstickier than many would have expected,\u201d given the Federal Reserve\u2019s efforts to raise interest rates and orchestrate a slowdown in the labor market, where employers have raised wages in an effort to attract talent, and then raised prices to offset those costs. More recently, economists and Fed policy makers have also pointed to corporate America\u2019s efforts to guard profit margins \u2014 through price increases and cost cuts \u2014 as a key driver of inflation. <\/p>\n See also: Why the latest inflation report could spell trouble for stocks<\/strong><\/p>\n Still, other evidence has emerged that executives, in quarterly earnings calls, aren\u2019t as concerned about inflation, as price increases overall begin to slow \u2014 the most recent consumer-price index showed year-over-year consumer inflation dipping lower than 5% for the first time in two years in April. A FactSet analysis found that so far this earnings season, fewer S&P 500 FactSet Senior Earnings Analyst John Butters, in a report on Friday, said that from March 15 through May 11, 278 companies that held earnings calls mentioned the word \u201cinflation.\u201d That\u2019s down from prior quarters. <\/p>\n Thirteen S&P 500 companies and three of the 30 Dow Jones Industrial Average There are also many outside the major indexes, including from overseas. As China moves on from COVID-19 restrictions, investors will get a clearer look at online activity and shopping trends in the nation when search-engine giant Baidu Inc. Jack in the Box Inc. Take Two\u2019s second take:<\/strong> Videogame publisher Take-Two Interactive Software.
\n WMT,
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\n and Target
\n TGT,
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\n in the coming week \u2014 along with Home Depot Inc.
\n HD,
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\n bargain retailer TJX Cos.
\n TJX,
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\n and Foot Locker Inc.
\n FL,
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\n \u2014 follow a surge in food prices last year that gobbled up more consumer spending power, leaving clothing and consumer electronics unsold. Analyst sentiment heading into the results largely cleaves according what stores sell more of the basics \u2014 namely groceries, where retailers have pushed price increases to buoy sales. <\/p>\n
\n SPX,
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\n companies than usual had remarked on the subject during earnings calls. <\/p>\nThis week in earnings<\/h2>\n
\n DJIA,
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\n components are set to report quarterly results during the week. <\/p>\n
\n BIDU,
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\n and e-commerce platform Alibaba Group Holding Ltd.
\n BABA,
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\n report. And when Rumble Inc.
\n RUM,
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\n last reported, the right-leaning social platform happened to do so right before a Manhattan grand jury voted to indict Donald Trump. The results and the indictment launched the stock higher, and executives could offer a sense into whether the indictment turned into any more actual engagement. <\/p>\n
\n JACK,
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\n and Deere & Co.
\n DE,
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\n also report. <\/p>\nThe call to put on your calendar<\/h2>\n
\n TTWO,
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\n \u2014 the RockStar Games owner that is behind \u201cGrand Theft Auto\u201d and \u201cRed Dead Redemption\u201d \u2014 reports quarterly results on Wednesday. Those results will arrive after disappointing holiday results for the industry. The company in February said it planned to cut costs and personnel and said it had miscalculated on its earlier expectations for the year, with Chief Executive Strauss Zelnick telling analysts \u201cwe\u2019re operating in an environment that is in many ways more challenging than we anticipated.\u201d <\/p>\n