US retail earnings preview: Home Depot, Target, Walmart, Gap in focus

The National Retail Federation says holiday sales, including e-commerce and non-store sales, will rise between 3% and 4% to $957 billion and $967bn in November and December. Last year sales were up 5.4% compared to 12.7% the previous year. On Tuesday, Home Depot is expected to post earnings of £3.76 per share, on revenue of $37.63bn. That compares to an EPS of $4.24 and revenue of $38.9bn. Home Depot is going through difficult times. Historically, home improvement stocks have been negatively impacted by interest rate hikes. At the same time weakening consumer demand and higher input costs have squeezed margins.

(AI Video Transcript)

The US retail sector

This week, the focus in the US is on the retail sector as several big companies, like Home Depot, Target, Walmart, and Gap, are releasing their earnings forecasts. And why is this important? Well, these forecasts give investors an idea of how much sales these companies expect to make during the holiday season. Right now, it looks like this year's holiday sales might not grow as much as in previous years. The National Retail Federation estimates that sales will only increase by 3% to 4%, reaching around $957 billion to $967 billion.

Home Depot

Let's take a closer look at Home Depot. Their stock is doing pretty well today, going up about 1.31% on the trading platform. However, overall, their shares have actually gone down about 8% since the beginning of the year. In comparison, the S&P 500, which is like a big index that shows the overall performance of the stock market, has gone up 16% this year.

Walmart

Now, let's talk about Walmart. People on the street, who are basically experts in this stuff, expect Walmart to make $1.51 per share with about $159.3 billion in revenue. Last year, in the same quarter, Walmart made $1.50 per share on $152.8 billion in revenue. So, they're doing pretty well. Walmart has been working really hard on improving their online sales, and it has paid off. In 2019, they made a little over $25 billion in online sales, but in the most recent fiscal year, that number shot up to $82.1 billion.

Investors are also going to be keeping a close eye on consumer behavior and trends in online shopping. This will give them an idea of how well Walmart's physical stores are doing in comparison to their online business. Walmart has had some struggles with their brick and mortar stores lately, so this will be really important to watch.