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With back-to-school shopping in full swing, large retail chains are about to take their turn on Wall Street’s earnings stage and outline their COVID-19 recovery.
Walmart Inc.
WMT,
Target Inc.
TGT,
Home Depot Inc.
HD,
and many other legacy bricks-and-mortar retailers are scheduled to reveal quarterly results this week. A wave of e-commerce reports last week from the likes of eBay Inc.
EBAY,
Wish
WISH,
Etsy Inc.
ETSY,
and others suggested that “reopenings are driving more shopping offline,” according to Susquehanna Financial Group analyst Shyam Patil. Now, we will see if more dollars landed in actual cash registers.
Walmart, Target and some other traditional retailers were able to keep up with the massive move to online shopping during COVID-19 restrictions, showing big gains in online sales while shutting down stores. Online growth rates have slowed down while in-store shopping rebounds — analysts largely believe that online sales should fall from growth rates greater than 50% to more like 10% to 20% as Walmart and Target lap the beginning of last year’s restrictions — and that could put Walmart in position to top Amazon.com Inc.’s
AMZN,
U.S. sales growth while ramping up its Walmart+ offering to challenge Amazon Prime.
Full earnings preview: U.S. sales growth at Walmart could outdo Amazon
“Overall, the growth in store traffic around key sales periods (back to school/ college phase and Q4 holidays) should benefit both retailers, driving strong attachment rates across the store,” Credit Suisse analysts wrote of Walmart and Target last week, later adding, “Online growth should remain relatively healthy vs. last year. Both retailers are adding capacity to deal with larger pick-up/delivery volumes.”
The story is not universal. Home Depot and Lowe’s Cos.
LOW,
for instance, actually had a hugely successful 2020, as shelter-in-place restrictions sent homeowners desperate to upgrade their shelter to home-improvement places. Department stores such as Macy’s Inc.
M,
and Kohl’s Corp.
KSS,
struggled to find an online audience, but now have easier comparisons with last year, while home-improvement stores will struggle to match their 2020 performance.
One universal theme will be the importance of the retailers’ forecasts. Executives should have a good handle on what the back-to-school season has looked like so far, and investors and analysts will be listening closely for any hints about performance. Plans for the holiday shopping season will also come up, as retailers look to bounce back with a big second half despite the looming Delta variant of COVID-19.
Last week’s reports “leads us to believe that increased caution by consumers amidst a rise of the Delta variant is leading to a modest slowdown in pace of recovery,
with mixed results for various subgroups,” Truist Securities internet analysts wrote last week.
Reports from the big retailers this week should bring that picture into fuller relief.
Put these calls on your calendar
-
Robinhood Markets Inc. When one of the buzziest names on Wall Street holds its first earnings conference call, you probably want to check it out. Robinhood
HOOD,
-6.79%
is an online-investing platform that launched the mobile-focused, no-fees investing approach that others have adopted en masse. Robinhood raised more than $2 billion in an initial public offering last month, and after a bit of a slow start, has seen shares spike since. For its first earnings call, Robinhood is leveraging the first thing it blew some IPO money on, the Say platform that is used to allow retail investors to ask questions in earnings calls, vote their proxies and more. Executives will take questions from the Say platform, as Tesla Inc.
TSLA,
-4.32%
executives have in the past, in their Wednesday afternoon call.
For more: 5 things (and a bonus) to know about Robinhood as it goes public
-
Cisco Systems Inc. Cisco
CSCO,
-0.34%
results always have larger readthroughs for the economy, and especially large tech projects — If large companies, college campuses and governments are spending big money to upgrade their internet infrastructure with Cisco, it is usually a good sign for spending from those important entities overall as well as a good sign they will soon be upgrading software and other tech necessities. While Chief Executive Chuck Robbins is not always as entertaining as predecessor John Chambers on the Cisco earnings call, what he says is just as important for understanding the current tech environment and macroeconomic readthroughs. Cisco will also hold its call Wednesday afternoon.
The number to watch
-
Nvidia Corp.’s data-center sales. Nvidia
NVDA,
-1.18%
has become the biggest semiconductor company by market value, and it isn’t really that close — the gaming specialist is now worth more than Intel Corp., Advanced Micro Devices Inc. and Micron Technology Inc. combined. That stupendous growth in Nvidia’s valuation in recent years has rested on its chips’ ability to speed up machine learning, especially in the data center, where cloud servers are increasingly crunching larger datasets for bigger tasks. Data-center sales are expected to grow by more than 30% despite facing tough comparisons, and hitting that mark could determine the course of Nvidia’s stock.
Full preview: Nvidia earnings will be a data-center show, but don’t miss the software on the side stage
This week in earnings
Three Dow Jones Industrial Average
DJIA,
components are expected to report this week, which will just about wrap up the Dow components — There are only two left to report out of 30. The S&P 500 index
SPX,
is similarly nearing the end, with a bit more than 40 still expected to report, and nearly half of those scheduled for this week.
Outside of the major indexes, new additions to Wall Street including Robinhood, Roblox Inc.
RBLX,
and Krispy Kreme Inc.
DNUT,
are on the week’s schedule.
Dow Jones reports: Walmart and Home Depot (Tuesday); Cisco (Wednesday)
S&P 500 reports
Tuesday: Agilent Technologies Inc.
A,
Amcor PLC
AMCR,
Home Depot, Walmart
Wednesday: Analog Devices Inc.
ADI,
Cisco, Jack Henry & Associates Inc.
JKHY,
Keysight Technologies Inc.
KEYS,
Lowe’s, Nvidia, Synopsys Inc.
SNPS,
Target, TJX Cos. Inc.
TJX,
Thursday: Applied Materials Inc.
AMAT,
Bath & Body Works Inc.
BBWI,
Estee Lauder Cos. Inc.
EL,
Ross Stores Inc.
ROST,
Tapestry Inc.
TPR,
Friday: Deere & Co.
DE,