At the very least, Costco Wholesale Corp. (COST) was able to increase sales in April when President Donald Trump intensified his trade battle. Mattel Inc. (MAT) temporarily ceased attempting to predict the impacts of tariffs, while Amazon.com Inc. (AMZN) stated that it has not yet experienced any impact. Restaurants have reported that imports are beginning to decline and that customers are becoming more wary.
However, when big-box retailer and online retailer Walmart Inc. (WMT) releases its first-quarter earnings on Thursday, we’ll get the clearest glimpse yet of how consumers are doing.
Walmart released its report Thursday, which analyst Michael Baker of D.A. Davidson referred to as the “most important consumer earnings report of the season.” Additionally, he stated that the results and prognosis for investors are considerably more concerning than usual due to persistent concerns about a potential recession.
“What they say is going to matter, not just only for Walmart but for how investors view the overall consumer economy – even more so now, because there’s just so many questions as it relates to what’s going on with tariffs on both the supply and the demand side,” Baker stated.
As concerns about the U.S. economy and the impact of rising expenses on American shoppers mounted, Walmart predicted in February that its quarterly earnings would decline for the first time in three years. Nevertheless, Wall Street anticipates that larger store chains will fare better than smaller rivals when consumers face difficulties, which is why the stock has increased by about 60% over the last 12 months.
Walmart’s prognosis and executives’ statements regarding local developments are likely to have a greater impact than the company’s actual quarterly results. According to Baker, retail-sales data seemed to be stable, at least through March and April. He pointed out that job-market data had held up, at least for the time being, but that Easter and efforts to stock up before the tariffs may have benefited those sales.
“The consumer is concerned about tariffs, and you see that in the consumer-sentiment data,” he stated. However, employment is doing fairly well. In general, people’s employment is the primary source of their actual expenditure.
Other businesses have also provided hints. Last Thursday, Costco announced that its April sales had increased by 7%. This month, Amazon claimed that it had not yet observed any “attenuation of demand,” noting that the majority of vendors on its online marketplace had not yet adjusted their pricing. Amazon added that shoppers may have more opportunities to search for possible bargains thanks to its extensive network of merchants who sell products on its website.
Regarding the supply, there will be inquiries regarding the quantity of goods that Walmart currently has on hand in its stockrooms, warehouses, and retail shelves in the United States. Because tariffs threaten to increase the cost of importing and ultimately drive up prices for customers, there may also be concerns about how much the corporation can or wants to order more. According to Baker, the company always has four to six weeks’ worth of inventory on hand.
According to Walmart’s most recent annual report, a “significant portion” of the general merchandise—items it sells in its U.S. stores that aren’t groceries or health-related products—is produced outside of the country. Walmart, however, has more negotiating power with its suppliers because of its size, which helps it maintain lower costs for customers.
More generally, Wall Street will be watching for indications that businesses are reducing their imports. The ports of Los Angeles and Long Beach, California, which receive a significant portion of incoming shipments from Asia, have seen a decline in the number of container ships landing in recent days, according to data from the Marine Exchange of Southern California.
However, commercial relations between the United States and other nations are subject to change at any time. China has been hit hard, with U.S. tariffs on the majority of goods from the world’s second-largest economy standing at 145%, even though the majority of the U.S.’s higher nation-specific duties are still on hold and imports are currently just subject to 10% baseline levies.
On Friday, however, Trump stated that a comparatively modest 80% tariff on Chinese goods “seems right.” But he added Treasury Secretary Scott Bessent would have to choose the precise rate. Over the weekend, U.S. and Chinese officials will meet in Switzerland to discuss trade.
This week’s profits
According to FactSet, twelve S&P 500 businesses will release their results in the coming week.
Deere & Co.’s (DE) earnings may provide some insight into how the trade war has affected agriculture. Videogame developer Take Two Interactive Inc. (TTWO) is also expected to disclose results following Electronic Arts Inc.’s (EA) report, which revealed what Oppenheimer analysts called “new momentum.” Cava Group Inc. (CAVA), a fast-casual restaurant brand, reports its earnings following a cautionary tale from Chipotle Mexican Grill Inc. (CMG). Chegg Inc. (CHGG), an online education provider, reports elsewhere.
The call that you should schedule
Cisco Systems, Inc. On Wednesday, the tech giant Cisco (CSCO) released its quarterly financial results. Following an increase in product orders, executives are expected to share their opinions on artificial intelligence and quantum computing. However, analysts remain skeptical regarding the expense and potential benefits of both technologies.
In a report released last week, UBS analysts also stated that they would be paying close attention to the company’s federal business, which Trump has attempted to reduce. But according to those analysts, the exposure—which amounts to around 10% of Cisco’s sales—was “manageable.”
The figures to keep an eye on
Sales of golf and footwear are reported by Topgolf Callaway Brands Corp. (MODG), which now operates the golf and entertainment chain Topgolf and sells Callaway golf equipment. These findings may give some insight into how concerns about inflation and the trade war have affected leisure activities and what steps the company may take to resolve any ensuing supply problems.
In its annual report, Topgolf Callaway stated that a “significant amount” of its goods were produced in Bangladesh, China, Vietnam, and Mexico. Randal Konik, an analyst at Jefferies, stated in a report last month that “industry consolidation and favorable demographic trends are expected to boost pricing and golf participation.” Other variables, however, might improve the company’s financial performance. Konik stated that he thought the stock, which has dropped more than 50% in the last 12 months, has “found a bottom.” The company intends to split Topgolf from its operations, possibly later this year.
The footwear industry is also heavily impacted by the trade war. After hiking prices, Birkenstock Holding (BIRK), a German manufacturer of sandals and clogs, also reported during the week. Results will also be shared by Boot Barn Holdings Inc. (BOOT), a retailer of workwear and western clothing that produces a large portion of its goods outside of the United States.
