Retail stocks take another hit today on BJ warning
More woe for the retail sector this morning BJ’s Wholesale (BJ) reported first-quarter results before the market open that missed expectations for same-store sales growth (with earnings per share matching estimates.) The big killer, though, was guidance from the company that said second-quarter comparable store sales are tracking below the 5.7% increase in the first quarter. That 5.7% growth in first-quarter comparable store sales was below the 5.9% that Wall Street analysts had expected. The stock closed today down 7.26% on the day.
Watch My YouTube Video: Trend of the Week How Tired Is the Consumer?
This week’s Trend of the Week is How Tired Is the Consumer? Consumer spending makes up 70% of the economy, so if consumers get tired and start spending less, the economy as a whole will slow down. The current consumer data doesn’t look good. Credit card debt is at an all-time high and delinquency rates are up to 4%. On February 21, Walmart (NYSE: WMT) came out worried about the full year, noting that consumers were purchasing less-expensive goods, and lowered its guidance for 2023 below Wall Street expectations. However, the lowered guidance didn’t affect the stock price. Why? As consumers are looking more tired, investors will look for stocks like Walmart and Costco, where a consumer would go to substitute products with lower prices. If you’re looking to put some money somewhere if the consumer is looking tired, Costco (NASDAQ: COST), Wal-Mart (NYSE: WMT) and Dollar General (NYSE: DG) are good options. If you believe the consumer is REALLY tired, you may want to look to put your money somewhere outside of the market, like a CD with a 5% yield. For other 5% options, check out my recent post “The best way to get a 5% yield–my choices and their pluses and minuses”: https://www.jubakpicks.com/the-best-way-to-get-a-5-yield-my-choices-and-their-pluses-and-minuses/.
Walmart’s caution a red flag on consumer spending: stocks fall today
Today, February 21, Walmart (WMT) reported s 76% year-over-year jump in earnings to $1.71 a share. Wall Street analysts had forecast earnings of $1.52 a share for the fourth quarter. Revenue rose 7.3% to $164 billion. Comparable store sales gained 8.3%. All that pushed the company’s shares higher today with the stock up 0.59% at the close. But Walmart’s cautious guidance for the rest of 2023 helped send the general market lower.
Please Watch My New YouTube Video: Christmas? Bah Humbug!
This week’s Trend of the Week: Christmas? Bah Humbug! Harris recently did a poll for Bloomberg that showed 60% of the people polled said they would be buying fewer gifts for fewer people this year due to inflation. That same poll said that 60% of respondents said they’d be cutting back on holiday travel, and 33% said they were skipping gift-giving completely. We’ll skip the discussion about the spirit of Christmas, and look at how this is going to affect retail and airline earnings in January. Retailers like Costco, Wal-Mart, and Kohl’s have already warned Wall Street that sales will not be great for Christmas, but even with that warning, retailers could surprise investors with lower-than-expected numbers. Costco announced its fiscal first-quarter earnings on December 10 with sales going up 6%. Although they were warned that margins were going to be soft, Wall Street was expecting 6.9% same-store growth and punished the shares accordingly with a huge drop in the stock. Costco is a great retailer for this moment, with affordable pricing on a wide range of goods and gas sales bringing in traffic. If Costco’s trending this way, I think we can expect the same from companies like Walmart and Kohl’s. It’s likely the airlines will take a hit as well, with the drop in holiday travel. For now, drink your wassail and try not to think about impending January earnings!
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
Expect a ton of earnings reports as third-quarter earnings season hits its stride. A few could even move a sector or maybe even the market as a whole. The biggie for the week, I’d argue, is Nvidia (NVDA) on Wednesday, November 16, after the market close. But we’ve also got big news in the retail sector with Walmart (WMT) due to report on November 15.
Walmart beats lowered revenue and earnings forecasts and reaffirms guidance for the second half of 2022
Walmart shares were up 5.11% today, August 16, at the close. I think it’s fair to call that a relief rally as the company beat lowered earnings and sales forecasts for fiscal second-quarter earnings today. And then confirmed its guidance for the second half of 2022. Remember that the company had slashed guidance twice in the last three months on May 17 and then again on July 26.
Please watch my new YouTube video: Investing to beat the coming recession
My one-hundred-and-sixtieth YouTube video “Investing to beat the coming recession” went up today. I’m back, after a week’s hiatus. This week I’m sharing some thoughts about the market trials and tribulations of Snap (SNAP) and Alphabet (GOOG) on recent earnings, my perspective going forward, and a few words of caution. We might be eager to think that we can find the stocks that will escape the recession. But as Walmart’s drop illustrates, as we get closer and closer to a declared recession, finding those few stocks gets harder and harder. It’s time to try something else, I’d suggest.
Walmart’s warning shrinks pool of safe stocks–Coke and McDonald’s benefit on strong earnings today
With Walmart (WMT) shares down 7.74% as of noon New York time today, July 26, on the company’s warning yesterday about falling revenue, the pool of safe consumer stocks continues to shrink. Which is bad if you owned Walmart or Dollar General (DG), also down today (by 1.88%.) But good (so far) if you owned Coca-Cola (KO) or McDonald’s (MCD), which on the evidence of today’s earnings report are surfing the recession in decent shape. Shares of Coca-Cola were up 1.58% and shares of McDonald’s (MCD) were up 2.51% as of noon.
Walmart’s cut to profit forecast signals death of hopes for soft landing for the economy
Walmart (WMT) cut its profit outlook after the market close on Monday, July 25. The company isn’t scheduled to report July quarter earnings until August 16. Walmart shares dropped 9.94% in after-hours trading. Adjusted earnings per share will fall as much as 13% in the current fiscal year as U.S. shoppers take a pass on big-ticket items and focus on buying groceries (with their lower profit margins.) This is Walmart’s second warning this year
Consumer staples outperform on Wednesday
It’s not surprising given the greater than expected decline in U.S. first quarter GDP reported on Wednesday, which followed on the slump in consumer confidence reported Tuesday, that stocks in the consumer staples sector outperformed both consumer discretionary stocks and the market in general. The Consumer Staples Select Sector SPDR ETF (XLP) gained 0.63% on Wednesday, June 29. By contrast the Consumer Discretionary Select Sector SPDR ETF (XLY) lost 0.08%.
Target outlook cut says some retailers have an inventory problem
Target (TGT) cut its profit outlook for the second time in three weeks. The company will attack oaring inventories in discretionary categories such as home furnishings with price mark downs, cancelling orders from vendors, and “off-loading excess inventory. (To deep discount sellers, I’d assume.) Three weeks ago, on May 18, the retailer’s shares slumped more than 25% after reporting that net profit shrank 52% in the first quarter. In those quarterly results, Target said its inventory rose 43%, compared with a year earlier.
In its guidance for the second quarter on May 18 Target said operating margins for the second quarter would be in a range centered around 5.3%. In today’s inventory warning the company said that orating margin would fall to 2%. Target’s stock, which fell as much as 7% today on the news, closed down 2.22% today. Shares of competitors Walmart (WMT) and Costco (COST) were down only 1.24% and 0.15%, respectively.
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