Retailers will dominate America’s first-quarter earnings season last leg this week, along with the odd food company and tech group.
Last week saw solid reports from Macy’s department store and the mighty Walmart change perceptions for the retail sector which has been under pressure from the online groups such as Amazon.
But it seems the sector is surviving, with the benefits of the tax cuts playing a part. That is wrong – the tax cut benefits won’t really appear in people’s bank accounts until the tax return season is over in a month or two.
Both Walmart and Macy’s revealed stronger than forecast sales growth, but upscale department store group, Nordstrom failed to convince with its quarterly numbers and lost nearly 11% in value on Friday and 5% over the week.
Walmart shares fell 1% on Friday and was up half a per cent over the week, while Macy’s shares rose 0.3% on Friday to cap a week where the shares soared more than 14%.
This week 22 companies on the S&P 500 are due to report. Among them are Target, Tiffany, department store chain, Kohl’s, brand discounter, TJX Cos, Ralph Lauren and L Brands (eg, Victoria’s Secret).
As well Lowes Co, the hardware group reports, as does discounters Ross Stores and Big Lots, plus Foot Locker, AutoZone, Best buy, The Gap, McKesson (drug store chain), Sears, Urban Outfitters and Shoe Carnival.
Investors will be keen to see if retailers and department stores are indeed emerging from a protracted slump or if they are benefiting from easier comparisons with the very weak first quarter they saw a year ago. That seems to be the most logical explanation for Macy’s surprise and Walmart’s figures.
No retailers to report include Hormel Foods and Hewlett Packard. Hormel (a processed meat maker – think Spam) will be watched closely to see if the problems that emerged in Campbell Soup’s weak quarterly report on Friday (a big loss after a big impairment of its fresh food business, a review of every brand held around the world and the resignation of the CEO of 7 years, Denise Morrison) have spread elsewhere.
In Australia, poker machine maker, Aristocrat Leisure is due to report, along with Thorn Group and perhaps Australian Agricultural Co which has already downgraded its figures and reported impairments.
