In the past week, we saw more signs of a tired consumer: people were spending less at amusement parks and delaying booking vacations further in the future. There were also signs that investors were getting angry about the U.S. job market and the Federal Reserve’s response, though some played down that fit of selling stocks.
This week, we’ll start to hear from some of the biggest shopping centers in the country: Home Depot Inc., a chain of home repair stores, and Walmart Inc., a big-box and online discount store. Their reports are due out on Tuesday and Thursday, respectively.
Walmart’s stock has gained almost 30% so far this year, which will show in its WMT 0.43% results. This is because bargain hunters with and without money are both drawn to the chain’s lower prices. But because Walmart is so big and has so much technology, the results might not really show what the retail business as a whole is like.
“It’s clear that consumer trends have gotten worse over the last few months.” “Walmart probably wasn’t completely safe from this, but it did better than some,” UBS analyst Michael Lasser wrote in a research note last week.
But after that drop, Lasser said that Walmart’s second-quarter results would be more about the chain’s “resilience” than about how well it did. This is because the company has spent years investing in and repositioning the business. Also, he said that the company’s new private-label products, such as Bettergoods, a line of cheap but “chef-inspired” food with “elevated taste,” and back-to-school products would help.
BofA analysts also said that Walmart’s digital-ad business, in which brands pay the company to promote their products on Walmart’s website, could help the company make more money even though sales of its other products are still lower than those of its grocery and wellness sections. It said that updating its stores and offering faster service were also things that worked in its favor.
Home Depot HD 0.09% will also report while investors and customers wait for interest rates to drop and the housing market to get better, which could lead to more homebuying and home improvement.
Big-ticket items, or things that cost more than $1,000, have sold less at the store. Customers have also been hesitant to take on bigger jobs like kitchen remodels that require financing because interest rates are high and prices are going up all the time.
For now, though, mortgage rates have gone down. The leaders of the company think there are bigger chances to work with more professional workers. Some economists have also said that it’s not clear when customers will decide they need to start buying again, even if interest rates don’t change much.
For Home Depot, the question is when will present interest rates become the new normal. This was said by Richard McPhail, Chief Financial Officer, on the company’s earnings call in May. “We’re not making a guess about this.” When you think about your behavior, spending money on living goes from being something you can choose to do to something you have to do.
This week in money made
Chili’s and Maggiano’s parent company, Brinker International Inc. EAT 1.23%, reports results during the week. This comes at a time when people are worried about how higher prices on the menu will affect demand. The economy in China is also having a rough time, so the e-commerce giant Alibaba Group Holding BABA -0.40% will also report. Buzzfeed Inc. BZFD 2.67% reports that the media business is still in a constant state of collapse.
Eighteen companies from the S&P 500 will report earnings next week, with three from the Dow. This was reported by FactSet on Friday.
AMAT 0.33%, Rumble Inc. (RUM 0.69%), Deere & Co. DE -0.89%, and Madison Square Garden Sports Corp. MSGS 1.40% all report.
The call you need to mark on your calendar
Tapestry: What about high-end handbags? Thursday is the day that Tapestry Inc. TPR 0.79%, the company that owns Coach, Kate Spade, and Stuart Weitzman, releases its earnings. We might be able to tell more from the results if the drop in sales seen elsewhere is also affecting the wealthy consumer, or at least the wealthy consumer who can afford “accessible luxury,” which is the market that Tapestry plays in. But in May, company leaders talked about a “challenging consumer backdrop,” and regulators don’t like that the company bought Capri.
The number to pay attention to
Did Cisco cut? Cisco Systems Inc., a big name in IT networking gear, said Friday that it was going to lay off thousands of workers as part of a larger push toward AI and cybersecurity. Another story said Cisco CSCO -0.79% might make the announcement as early as Wednesday, when the company gives its quarterly report. The old guard in tech has had to adapt to subscriptions, the cloud, and AI, and Cisco has had to deal with supply problems. However, the company’s most recent results showed that demand was more solid. Even so, the stock is down 10% so far this year, and in June, experts at Melius Research said that Cisco “remains a show-me story.”
