Walmart (WMT) earnings Q1 2023

Workers move shopping carts in front of a Walmart store in Lakewood, California, on Sunday, May 15, 2022.

Bing Guan | Bloomberg | Getty Images

Walmart is set to report earnings before the bell on Tuesday, as investors and economists look for clues about how US consumers are faring from inflation — and whether they’ve started to pull back spending.

Here’s what Wall Street expects for the company’s fiscal first quarter, according to Refinitiv consensus estimates:

  • Earnings per share: $1.48 expected
  • Revenue: $138.94 billion expected

As the nation’s largest retailer, Walmart’s sales can reflect broader economic trends and consumer sentiment. For example, when Americans received their first doses of Covid-19 vaccine a year ago, the major retailer said sales of items related to personal care, celebrations and travel, including teeth whiteners and new clothes, had skyrocketed. Now industry watchers will be looking for signs that shoppers are switching to cheaper brands or smaller packs, or skipping discretionary items like clothing and electronics.

Walmart’s earnings report agrees with another well-regarded metric. The government is due to release April retail sales figures on Tuesday morning. The new data points will give markets a “yardstick,” said Steph Wissink, a retail analyst at Jefferies.

“Walmart touches a lot of American consumers,” she said. “It also has a very strong momentum for a consumer segment that tends to be the most sensitive.”

Inflation remains at a high of almost four decades. The consumer price index, a broad measure of the prices of goods and services, rose 8.3% in April year on year, according to the Bureau of Labor Statistics.

Grocery, Walmart’s top selling category, is one of the hardest-hit categories. Food costs rose 9.4% on a 12-month basis in April, according to unadjusted data from the BLS.

Gas costs also rose to a national average of $4,483 a gallon Monday, according to the AAA — with even higher prices on the West Coast and Northeast. Prices at the pump began to increase noticeably in March, when Russia was at war in Ukraine.

Inflation is expected to lead to higher sales for Walmart as shoppers turn to the retailer for its reputation, said Chris Horvers, a retail analyst at JP Morgan. In the long term, however, the discounter faces risks if low-income households only buy the essentials or if profits have to fall to keep prices down.

“Walmart is in a moment where they are gaining stake,” he said. “If the environment stays the way it is, you need to see Walmart start investing in the price and at the same time you could – for the bottom of the [income] Funnel – Loss in the more discretionary categories as well as some of the consumers trading from Walmart into the dollar store channel.

Walmart shares closed at $148.21 on Monday. The stock is up about 2.5% so far this year, outperforming the broader market as investors look to consumer staples amid economic uncertainty. The company’s market capitalization is nearly $408 billion.

This story evolves. Please check back for updates. Walmart (WMT) earnings Q1 2023

Gary B. Graves

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