The nation’s retailers limped into last year’s holiday season with too much stuff that people didn’t want. We’re about to find out how much of it they were able to get rid of, and how much an avalanche of markdowns hurt profits.
Results from the likes of Walmart Inc.
WMT,
Home Depot Inc.
HD,
and Alibaba Group Holding Ltd.
BABA,
will follow last year’s massive retail inventory mess, which found retail chains sitting on clothing, electronics and toys that they had a hard time selling, after inflation siphoned away demand to groceries and other basics. Retailers rolled out big price cuts on many nonfood items in an effort to entice customers.
Analysts generally say that the bigger the chain, the bigger the advantage in that environment. That’s particularly true if that retailer happens to sell groceries.
But results in the third quarter for the biggest big-box retailers — Walmart and Target Corp.
TGT,
which both sell a lot of groceries — were mixed. Target, in November, said it expected fourth-quarter same-store sales to fall. However, Walmart managed to fare better at that time. And analysts still like Walmart’s odds, comparatively, ahead of its results.
For more: Walmart, Target and Costco earnings on deck as retail giants face tough holiday season comparison
“We expect continued momentum in grocery to help offset challenges in the general merchandise category,” Oppenheimer analysts said of Walmart in a research note this month.
However, as MarketWatch recently reported, holiday-season data from Placer.ai, a retail consumer-traffic analytics firm, wasn’t exactly encouraging.
“The strength of 2021 made for difficult year-over-year comparisons, as pent-up demand, accumulated savings and an early start drove an unusually robust season in 2021, so assessing the success of 2022’s holiday season is challenging,” Placer.ai said in a blog post.
“Visits to Target, Walmart, Costco, BJ’s Wholesale, and Sam’s Club were down in October and November 2022 relative to 2021, likely a result of comparisons to last year’s extended season,” the post continued.
Trends improved somewhat in December. But the firm suggested a more sluggish January, as pressures from higher prices held firm.
“Still, traffic data does seem to indicate that the economic difficulties of 2022 have begun to take a toll on consumers – January visits were down for almost all superstore chains analyzed, with the exception of Target that seems to be continuing its winning streak in the new year,” according to the post.
Mark up your calendars: Check out MarketWatch’s earnings calendar
Results elsewhere will flesh out the story for the broader e-commerce slump and a stalling housing industry. Home Depot’s results will likely touch on consumer appetites for home improvement, as investors retreat from the housing market amid rising rates. Online retailers eBay Inc.
EBAY,
Etsy Inc.
ETSY,
Overstock.com Inc.
OSTK,
and Wayfair Inc.
W,
which recently announced it would cut 10% of its workforce, report after Amazon.com Inc.
AMZN,
this month put up its least profitable holiday quarter since 2014.
The consumer discretionary sector has been among those leading the S&P 500 in profit declines, according to a FactSet report published on Friday. However, Amazon is largely responsible for that sector’s declines.
This week in earnings
Sixty-one S&P 500
SPX,
companies report results during this holiday-shortened week, including two components of the Dow Jones Industrial Average
DJIA,
according to FactSet.
Outside the major indexes, struggling fake-meat maker Beyond Meat Inc.
BYND,
also reports, as it cuts staff and deals with an onslaught of competition — from rivals churning out their own imitation meat and those making the real stuff. Crypto exchange Coinbase Global Inc.
COIN,
will issue results after FTX’s downfall scorched the crypto landscape, but the stock has been moving higher lately amid a rebound in the price of bitcoin
BTCUSD,
Meme-stock era record falls: Retail traders dumped $1.5 billion a day into U.S. equities in January
Elsewhere, Moderna Inc.
MRNA,
reports following mixed results from its flu shot, and as the company changes course to continue to provide free COVID-19 vaccines. And results from Warner Bros. Discovery Inc.
WBD,
— which oversees content made by HBO, TNT and other channels — could provide more insight on the digital ad market and streaming markets, as the media giant weighs how much to shuffle operations.
The calls to put on your calendar
Peak concert demand, peak Ticketmaster rage: Even as smaller artists struggled with higher prices and equipment shortages last year, Live Nation Entertainment Inc.
LYV,
— the concert-industry gatekeeper that owns Ticketmaster and reports earnings Thursday — had a banner 2022 despite decades-high inflation. But higher ticket demand, higher ticket prices, and the record sales and profits Live Nation
LYV,
reaped from the concert industry’s post-lockdown comeback haven’t come without fan frustration and lawmaker scrutiny.
The company reportedly faces an antitrust investigation after the botched sale of Taylor Swift concert tickets last year, and the company faced questions from lawmakers last month. Joe Berchtold, Live Nation’s Chief Financial Officer, blamed the Swift debacle on a flood of online traffic from bots that he said overwhelmed Ticketmaster’s technological infrastructure.
See also: Ticketmaster blames bots for botched Taylor Swift sale. Senator says it’s ‘unbelievable’ and company must ‘figure this out.’
Either way, many analysts have downplayed the prospect of a breakup of the company. But Benchmark analysts last month said “regulatory clouds will persist” following the hearing and the investigation. Executives’ sense of competition, regulation and concert demand — which so far has held up as demand for other goods wanes — could be topics on the call.
The numbers to watch
Nvidia, crypto, gaming and AI: Graphics chip maker Nvidia Corp.
NVDA,
— whose processors help power PC games, data centers, crypto mining and AI — reports results on Wednesday. But it will report after its tech-equipment peers got banged up last year after demand for PCs, videogames and other digital goods during the pandemic began topping out. Susquehanna Financial Group analyst Christopher Rolland, in a note on Thursday, said he expected weaker gaming and PC demand to weigh on Nvidia’s results. But as other tech firms rush to crank out the next ChatGPT, BofA analysts recently said Nvidia stands to ride a wave of investments in AI.
