Walmart and retail earnings, October CPI in focus this week
Major retailers, including Walmart (WMT) and Target (TGT), are set to release their earnings results this week. Yahoo Finance Markets Reporter Josh Schafer highlights the economic forecasts for October's Consumer Price Index (CPI) — due out on Tuesday, November 14 — and how inflation could be expected to weigh on retail earnings.
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Video Transcript
- Here's a breakdown what you need to have your eye on this week is Yahoo Finance's reporter, Josh Schafer. Josh, what are you watching?
JOSH SCHAFER: Hey, Rachelle. Yeah, so I got the earnings calendar next to me here specifically focusing on retail. So you can see we get a wide range, a wide look at the consumer. When you think about starting with Home Depot, of course, that will be some home improvement buying and what's going on in that housing market? Are people moving or are people still renovating their homes at home as we saw over the pandemic? We know those trends have sort of shifted.
Then you take a look at Target, TJ Maxx, Walmart here on Thursday, and BJ's on Friday. So really a wide look at the consumer. And I think that's going to be a big trend overall when we think about the week.
So when you think about what we have for the economic calendar, here is the expectations for CPI inflation. This comes out tomorrow. 3.3%. Headline inflation, a lot of that coming down from 3.7% largely driven by the fall we've seen in energy prices over the last month.
This is usually the big one though, right? Core inflation, this is what the Fed looks at. Looking to see prices increase 4.1% in the month of October. That would be in line with what we saw last month. So perhaps the inflation number not moving down quite as much as the central bank would maybe hope.
And another one I'm watching this week, guys, is retail sales. Retail sales out on Wednesday. And you can see it right here expected to drop off in October. This would be a big drop for retail sales. We have not seen retail sales fall on a monthly basis since here in March.
So to see that fall off, remember, we've been talking a lot about how the consumer is feeding this economy. The consumer is why the economy grew about 5% last quarter. That's what's been driving these surprising growth. So we're going to get a look at if that's continuing for the start of the fourth quarter.
A final chart to show you just when we think about the consumer, I was looking at this one over the weekend, it really just caught my eye. This is Walmart and Target. This is Walmart stock performance this year up 17%. This is Target down 27%. When you think about these retail earnings and what we can learn this week, it's not just about the consumer, it's about which consumer and who is holding up.
Target, obviously a very discretionary company with how much they sell in electronics beyond groceries versus Walmart considered more of a consumer staple, the kind of company that benefits from trade downs. A lot of strategists right now talking on the street. Yes, maybe the consumer is doing OK but that doesn't mean every company that sells the consumer is doing OK. So it'll be interesting to parse through those reports as we go through the week.
- Yeah, some key indicators there, Josh. Particularly going to be important to see Walmart because we have seen a lot of higher income shoppers coming through the door and they've highlighted that in the past. Josh Schafer with the breakdown of a look ahead this week. Thanks so much.
