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Walmart and Target earnings, housing data: What to know this week – Yahoo Tech

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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. 

Walmart logo is displayed on a mobile phone screen photographed on surgical masks background for illustration photo during the coronavirus pandemic. Gliwice, Poland on April 21, 2021.  (Photo by Beata Zawrzel/NurPhoto via Getty Images)Walmart logo is displayed on a mobile phone screen photographed on surgical masks background for illustration photo during the coronavirus pandemic. Gliwice, Poland on April 21, 2021.  (Photo by Beata Zawrzel/NurPhoto via Getty Images)

Walmart logo is displayed on a mobile phone screen photographed on surgical masks background for illustration photo during the coronavirus pandemic. Gliwice, Poland on April 21, 2021. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

Meanwhile, peer big box retailer Target is also slated to report results this week. Like Walmart, Target’s first-quarter results have the disadvantage of lapping last year’s exceptionally strong figures. However, Target —with its wide range of discretionary goods available for sale — may have caught a biggest boost from the January and March stimulus check disbursements than Walmart did. Consensus analysts expect Target’s revenue grew 11% to $21.49 billion in the first three months of the year, slowing from the fourth quarter’s 21% growth rate but matching the rise from the same three months of last year. 

Target has also seen consistently larger growth in e-commerce sales than Walmart has over the course of the pandemic. Digital comparable sales grew at a year-over-year rate of as much as 195% in the second quarter of 2020, marking the fastest increase in company history. Those growth rates have moderated somewhat in the months since, but not by much – Target last reported a 118% jump in digital sales for its final three months of 2020. 

While Target declined to offer full-year guidance, CEO Brian Cornell did offer some commentary around shopping trends at the start of the year, suggesting a pick-up in in-person shopping but a continuation of some purchasing trends from the pandemic. 

“They’re looking for the opportunity to shop our stores and find new items,” Cornell said during a call with investors. “They’re tired of the yoga pants and really appreciate some of the new assortment we have in apparel. They’re still shopping for their homes as they refresh the core. They’re still eating at home so kitchen and food-related items are still really important.” 

Housing data 

Economic data this week will center on new updates on the state of the U.S. housing market, with reports on housing starts, building permits and existing home sales all due for release. 

New homebuilding likely pulled back sharply in April following a surge to the highest level since 2006 in March. Consensus economists expect Tuesday’s housing starts report from the Commerce Department will show starts fell by 2.1% to a seasonally adjusted annualized rate of 1.703 million, according to Bloomberg data. 

“After consecutive volatile months due to weather – housing starts declined 11.3% in February followed by a 19.4% surge in March – we expect starts to pull back only slightly by 0.3% m-o-m to an annualized pace of 1730k in April. The strong weather-driven rebound in March likely overstated the underlying trend for starts,” Nomura economist Lewis Alexander wrote in a note Friday. He added, however, that “limited supply for existing single-family homes should continue to support housing starts over the near term.” 

Though starts likely pulled back last month, building permits — which point to future homebuilding — are expected to have increased for a second straight month. Consensus economists are looking for a monthly increase of 0.6% to a seasonally adjusted annualized rate of 1.770 million, or the highest level since January’s 15-year high.

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The surge in housing market activity in 2020 has given way to choppiness at the start of this year, with mortgage rates lifting off record lows and tightening inventory pushing home prices to the highest level since 2006. These factors are expected to have weighed on existing home sales for April. The National Association of Realtors’ report on Friday will likely show a monthly rise of just 1.2% for the sale of previously owned homes, only partially reversing March’s 3.7% drop. 

“Sales have come down substantially since peaking during the winter, but the level of activity remains elevated,” Credit Suisse economist James Sweeney wrote in a note Friday. “We expect existing sales to remain robust as mortgage rates remain low, homebuilders’ sentiment remains high, and consumer sentiment begins to rebound.”

Earnings calendar

  • Monday: Clover Health Investments (CLOV), Lordstown Motor Corp. (RIDE) before market open; Riot Blockchain (RIOT), Fisker (FSR) after market close 

  • Tuesday: Walmart (WMT), Macy’s (M), Home Depot (HD) before market open; Take-Two Interactive Software (TTWO) after market close

  • Wednesday: Target (TGT), Lowe’s (LOW), TJX Cos. (TJX) before market open; Cisco Systems (CSCO), L Brands (LB) after market close 

  • Thursday: Kohl’s (KSS), Petco Health and Wellness Company Inc. (WOOF), Ralph Lauren (RL) before market open; Applied Materials (AMAT), Palo Alto Network (PANW) after market close

  • Friday: VF Corp (VFC), Deere (DE), Foot Locker (FL) before market open 

Economic calendar

  • Monday: Empire manufacturing, May (24.0 expected, 26.3 in April); NAHB Housing Market Index, May (83 expected, 83 in April); Total net TIC flows, March ($72.6 billion in February); Net long-term TIC flows, March ($4.2 billion in February) 

  • Tuesday: Housing starts, month-over-month, April (-2.0% expected, 19.4% in March); Building permits, month-over-month, April (0.7% expected, 2.3% in March)

  • Wednesday: MBA mortgage applications, May 14 (2.1% during prior week); FOMC Meeting Minutes, April meeting 

  • Thursday: Initial jobless claims, week ended May 15 (450,000 expected, 473,000 during prior week); Continuing claims, week ended May 8 (3.64 million expected, 3.655 million during prior week); Philadelphia Fed business outlook index, May (41.9 expected, 50.2 in April); Leading index, April (1.2% expected, 1.3% in May) 

  • Friday: Markit U.S. manufacturing PMI, May preliminary (60.4 expected, 60.5 in April); Markit U.S. services PMI, May preliminary (64.7 expected, 64.7 in April); Markit U.S. composite PMI, May preliminary (63.5 in April); Existing home sales, month-over-month, April (0.9% expected, -3.7% in March)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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