Economy

The Week Ahead: US retail sales, Walmart and Target earnings

The week of August 15-19 should provide lots of insights about the American consumer.

The Week Ahead: US retail sales, Walmart and Target earnings

(Illustration by The Current)

Welcome to a new week. Ecommerce-focused professional events are in another state of summer lull after eTail gathered in Boston last week. Still, there will be plenty of news that offers a look at the shape of the industry and consumer behavior right now. Here’s a look at the schedule for earnings and indicators:

Economic indicators

The first week of the month put a focus on jobs, while last week spotlighted prices through inflation. This week, consumer spending steps into the ring. Federal agencies will be releasing the following data:

  • Total retail sales for July will be reported on Wednesday. This measure of consumer spending has remained steady, despite rising prices due to inflation. August 17
  • Retail inventories will be reported on Wednesday. This metric has been closely watched as retailers have sought to work through a glut of inventory that resulted from supply chain bottlenecks and demand mismatch with the return to in-person activities. August 17
  • Ecommerce sales for the second quarter will be reported on Friday. Over the last quarter, a variety of analysts have released predictions that ecommerce sales will reach over $1 trillion in 2022. This release will provide a look at progress toward that milestone halfway through the year. August 19

Earnings

Second quarter earnings season is beginning to round into the home stretch. But before we get to the finish line, a group of the nation’s largest retailers will issue their results, providing a look at consumer and economic trends in the process.

  • Tuesday, August 18: Walmart, Home Depot
  • Wednesday, August 19: Target, Lowe’s, TJX, Bath & Body Works
  • Thursday, August 20: Estee Lauder Companies, Tapestry, Inc., Kohl’s, SpartanNash

5 questions we're asking

Here’s a look at some of the key questions we’ll be looking to answer as we dig through these reports:

  • What’s the state of the consumer? Retail sales and earnings will offer important signs about whether consumers are shifting how they spend as a result of inflation, and what they are spending money on right now. In a pre-emptive announcement to cut its profit outlook issued last month, Walmart said it saw consumers spending more on food and fuel, and less on more profitable categories like apparel and home goods. We’ll look for more details about how shoppers are making decisions.
  • Are inventories starting to move? Entering the second quarter, retailers said one of their major initiatives involved marking down items and even canceling orders to move through the glut of inventory. Target already made its own move to cut its profit outlook as a result of this. Earnings reports will offer an update on progress.
  • Was the ecommerce dip just a blip? Recent ecommerce-focused results have pointed to softening sales as a result of a return to in-store shopping. So far this quarter, the large platforms like Amazon, Shopify and Etsy have reported mixed results. What’s the view from the largest retailers, which double as some of the biggest ecommerce platforms? We’ll learn a lot this week.
  • How are private label brands faring? In times when wallets are tighter, consumers often opt for store brands to save. Walmart and Target have some of the largest private label operations, so they should have insights on whether there is widespread switching, or trading down.
  • Did home and garden bounce back? Among categories that rose in the pandemic, home and garden had one of the sharpest dips following a return to more in-person events and experiences taking place outside of the home. But the arrival of summer (think: Patio, grilling, house projects) may have led this to tick back up in the quarter that ended in June. Walmart, Target, Home Depot and Lowe's all have earnings this week. That should tell us a lot about how this important consumer category is faring.


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