When Walmart Inc. and Target Corp. report quarterly results, analysts expect to see evidence of consumer needs massively eclipsing consumer wants, even as signs emerge that corporate America is growing less worried about inflation.
“Overall, we generally expect a difficult start to the year, mainly driven by ongoing headwinds in discretionary categories partially offsetting continued robust momentum in grocery,” retail-store analysts at Oppenheimer said in a research note on Wednesday. The Oppenheimer analysts said that Walmart was still cutting prices on offerings like clothing and TVs, but said grocery demand and market-share gains for the big-box chain would likely help its results. For Target, they said “sluggish” sales were likely for the quarter, as weaker demand for home goods, apparel and consumer electronics work as a counterweight against a better showing in its store’s food, beverage and beauty aisles.
Target, at least through January and February, was the outlier to that trend, before visits slipped into negative territory. The firm said seasonal trends — namely, a drop-off from the holiday-season surge — and more conservative consumer budgeting could be partly responsible for the slump. But they also said that consumers’ visits to those stores were getting longer.
FactSet Senior Earnings Analyst John Butters, in a report on Friday, said that from March 15 through May 11, 278 companies that held earnings calls mentioned the word “inflation.” That’s down from prior quarters.