This week’s slate of quarterly earnings results will include big box retailers Target (TGT) and Walmart (WMT), which will provide investors with more information on consumer spending trends during the COVID-19 pandemic recovery. New economic data on housing starts, building permits and existing home sales will also offer an update on the state of the housing market, which has started to cool as mortgage interest rates tick up and inventory tightens.
Walmart has been one of the major beneficiaries of pandemic-era pantry-loading trends, and sales have also received boosts from multiple rounds of government-issued stimulus checks. Walmart reported record fourth-quarter and full-year sales in February, with U.S. comparable same-store sales up 8.6% in the final three months of 2020, accelerating over the prior quarter.
However, this momentum likely slowed down in the first three months of the year, even as two more rounds of direct checks to most Americans were distributed. Consensus analysts are looking to see revenue dip 2% over last year to $131.99 billion. That would mark the big box retailer’s first year-over-year revenue drop since 2016.
Earnings, however, are expected to rise by 4% to $1.22 per share, with incremental costs related to the coronavirus beginning to ease. Last year, Walmart incurred more than $4 billion in COVID-related costs. Walmart Chief Financial Officer Brett Biggs said in February to expect operating income and earnings per share to be flat to up slightly for the first quarter.
Still, the company has been shelling out additional capital to raise wages for workers and build out its relationships with shoppers. The company also said it expected to spend nearly $14 billion in the current fiscal year to build out supply chain capacity and automation to keep pace with demand.
Growth in some Walmart’s newer initiatives will also be a key focus of this week’s earnings report and call. In September, Walmart launched Walmart+, a competitor to Amazon’s Prime membership offering customers unlimited free delivery on items from household goods to groceries and an in-app payments option. The initiative has been viewed as a key means of retaining customers acquired during the pandemic, though management did not offer Walmart+’s subscriber number during February’s earnings call.