Retail Sales -1.1% on Autos, Delta Variant?
Tuesday, August 17, 2021
New Retail Sales numbers for July were released before the bell this Tuesday, posting a big drop from expectations and month over month: -1.1% was almost 4x worse than the -0.3% expected. This follows the upwardly revised +0.7% from June. It also shows that, despite a mostly robust Great Reopening, monthly Retail Sales numbers have been in negative territory 3 of the past 6 months.
Subtracting volatile auto sales for the month, this number moves to -0.4%, twice as low as expected. Minus gasoline prices, we’re -1.4%. The Control number, which gets plugged into a high amount of other economic reads, was also lower than expected, -1%. From here, it would look like the very hot auto market — both for new and used vehicles — has cooled off. But is this still part of supply constraints issues that have kept new cars in limited inventory, or a slowing down of demand?
We also may wish to consider whether the Delta variant of Covid-19, which began to generate a legit fourth wave of the coronavirus last month, has anything to do with falling Retail Sales numbers. Certain regions in the country — including the South/Southeast — which had been growing at a faster economic clip, are now also in the throes of this fourth wave. This would necessarily dampen retail demand.
Speaking of retail, Walmart WMT easily took out estimates on both top and bottom lines this morning, posting $1.78 per share (well ahead of the $1.56 expected) on $141.05 billion in sales, which swung to a positive from expectations by 2.4%. This represents the highest quarter of revenue not associated with holiday season in the company’s history. Yet shares dropped 1% on the news before turning positive a half-hour before the market open.
While same-store sales rose 5.2%, higher than the 3.3% analysts were looking for, a big slow-down in e-commerce sales for the quarter has made investors take notice: only 6% growth in e-commerce in Q2 was an extreme slowing from the 90%+ e-commerce growth we saw during the height of the pandemic. That said, full-year earnings guidance has been raised to $6.20-6.35 per share; the Zacks consensus had been expecting $6.00. For more on WMT's earnings, click here.
Home Depot HD also outperformed expectations on both top and bottom lines: $4.53 per share on $41.12 billion surpassed the $4.43 per share and $40.71 billion, representing double-digit earnings growth and increased revenues by 8.1%. Same-store sales disappointed a bit at +4.5% on a -5.8% drop in customer transactions, though the average receipt grew 11.3% on higher costs. Shares are -3.3% on the news. For more on HD's earnings, click here.
Questions or comments about this article and/or its author? Click here>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Walmart Inc. (WMT) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
