The Walmart logo is seen outside of one of its stores in Selinsgrove, Pennsylvania.
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Walmart will report its latest quarterly earnings before the bell on Thursday, as investors try to parse whether softer retail sales in January were a blip or a bigger warning sign.
As Walmart is the top grocer in the U.S., investors often view it as a barometer of consumer health. The company will report its holiday-season results and is expected to give a forecast for the year ahead. Its leaders may also preview how they see the economic backdrop in the U.S. and weigh in on the potential effect of federal policy decisions, such as tariffs.
Here’s what Wall Street expects for the big-box retailer’s fiscal fourth quarter, according to a survey of analysts by LSEG:
- Earnings per share: 64 cents
- Revenue: $180.01 billion
Retail sales for January came in weaker than expected, setting off alarm bells for some investors. The metric dropped 0.9% for the month, which was below the Dow Jones estimate for a 0.2% decline.
Restaurant chains, including Restaurant Brands’ Burger King and Popeyes, also had weak trends in January even though they said sales improved in the fourth quarter.
Yet, those restaurants and some retail experts have blamed short-term factors for the drop, including winter storms, consumers taking a break after splurging over the holidays and contending with damage and disruption from the Los Angeles wildfires.
Holiday data came in strong across the retail industry, as sales rose 3.8% year over year to total $964.4 billion in November and December, according to the National Retail Federation. The trend reflected a return to more typical pre-pandemic gains. Average sales growth during the holiday season was 3.6% from 2010 to 2019, according to NRF data, but shot up during the Covid-19 pandemic.
Some unique factors could work in Walmart’s favor, regardless of the economic backdrop. The big-box retailer’s online sales have been climbing, with 10 straight quarters of double-digit gains. Its advertising business and third-party marketplace are small compared to Amazon’s, but the segments have posted gains and driven higher margins than Walmart’s retail business.
Plus, Walmart has attracted more customers with higher incomes. Walmart CEO Doug McMillon said in November that households earning more than $100,000 drove 75% of market share gains in the third quarter.
Some investors have hiked expectations for Walmart. Simeon Gutman, a retail analyst for Morgan Stanley, raised Walmart’s price target to $153 on Tuesday, pointing to the retailer’s newer and more profitable moneymakers including its advertising business and subscription-based membership program Walmart+.
As of Wednesday’s close, shares of Walmart are up about 83% over the past year. Shares closed on Wednesday at $104.00, up about 15% so far this year and outpacing the approximately 4% gains of the S&P 500 during the same period.
