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Walmart, Target, Home Depot, Lowe tell us about the economy

How well do American consumers endure high inflation? It depends on who you ask.

Four major retailers — Walmart, Goal, Home Depot When Loews — This week, we reported quarterly financial results. Each provided a different perspective on where and how people are spending their money.

Wal-Mart states that some price-sensitive customers are beginning to trade down to their own brands, Home Depot emphasizes customer-based resilience, a significant proportion of which are professional homebuilders and contractors.

The report came later Amazon In late April Flashing warning sign for the retail industry When it recorded the slowest earnings growth in any quarter since the collapse of dotcom in 2001 and presented a dark forecast.

Still, expectations for Wall Street were higher than this week for both Wal-Mart and Target. Analysts and investors expect two large retailers to hit profits in the most recent period as supply chain costs impact sales and build up unwanted inventories such as TVs and kitchen equipment. I didn’t. Wal-Mart fell 11.4% on Tuesday, marking the worst day since October 1987. Worst day in 35 years..

However, The Home Depot and Loews have seen a stronger force among shoppers in recent weeks.

“Our customers are resilient. We’re not as sensitive to inflation as we initially expected,” Home Depot CEO Ted Decker said in a statement Tuesday. Said. (Wednesday afternoon trading saw the share of both housing improvement chains fall by more than 5%. Broader market sold out.. )

The mixed commentary from these retailers is largely due to the fact that Americans are experiencing different economic fluctuations depending on their income level.Businesses and consumers canned, toilet paper, and Peloton A bicycle that soars. Multiple rounds of incentives fueled spending on new sneakers and electronics.

But as that money runs out, retailers have to navigate their new normal.This includes inflation High price for the first time in 40 yearsRussia’s war in Ukraine and a still dysfunctional global supply chain.

Wal-Mart CEO Doug McMillon said, “We have experienced high levels of inflation in the international market for many years, but the inflation rate in the United States is so high that it moves very fast in both food and general commodities. It’s rare to be doing that. ” Conference call.

This week’s results may foresee trouble for many retailers, including: Macy’s, Coles, Nordstrom When gap, The results for the first quarter of 2022 have not yet been reported. Walmart makes shoppers spend more on groceries for any item.

At the same time, as more Americans plan their vacations and attend weddings, retailers are citing increasing demand for items such as luggage, dresses and cosmetics. But the concern is that consumers can afford these things, forcing them to make trade-offs somewhere.Or look for discounted items in shops like: TJ Maxx..

Walmart, Target, Home Depot and Lowe talk about the situation of American consumers.

Walmart

Wal-Mart sees a mixed image shaped by consumer household income and how they feel about the future. But in the last quarter, the country’s largest retailer said shoppers are paying attention to their budgets.

The customer left the store and left the retailer’s website with few items purchased. Many of them skipped new clothing and other common commodities due to rising prices for gas and groceries. Chief Financial Officer Brett Bigs tells CNBC that some brands trade to smaller products, such as half-gallon milk and store-branded lunch meat, rather than cheaper brands or more expensive brand names. He said he was down.

Meanwhile, he said, some customers are clamoring for new patio furniture and eagerly chasing new flashy consoles.

“Looking at US demographics and putting a customer map on top of it, we would really be the same,” Bigs said. “So some people feel more pressure than others, and I think that’s what we’re seeing.”

Goal

Target said he is seeing resilient consumers with new priorities as pandemics become more conceivable later.

“They are moving from buying TV to buying luggage,” CEO Brian Cornell said in an interview with CNBC’s Squawk Box. He later added, “They are still shopping, but they started spending dollars differently.”

He said the change was reflected in the first quarter purchases. The customer purchased decorations and gifts for Easter and his Mother’s Day celebrations. They held and attended a bigger kid’s birthday party — which led to a surge in toy sales. They also purchased items such as bicycles and small kitchen utensils less often. Booked flights and scheduled trips..

Cornell University pointed out high spending levels that Target opposed in the first quarter of the previous year, as Americans earned money from stimulating checks and had few places to spend them.

Despite the challenging comparison, comparable sales still grew, he said. In addition, Target store and website traffic increased by nearly 4% year-over-year. However, sales growth includes the effects of inflation, which makes everything from fares to groceries expensive.

The target for the previous quarter also had a higher level of price cuts. This was a staple of the retail industry, as shoppers were more motivated to buy during a pandemic and retailers put fewer items on the shelves.

Home Depot

Loews

Loews repeated similar feelings at the conference call on Wednesday. CEO Marvin Ellison said soaring house prices, dilapidated housing stock, Ongoing housing shortage It is the main economic driver of Rowe’s business.

“This is one of the reasons I think housing improvement is a unique retail sector and we can have this macro environment with many questions about consumer health,” he told analysts.

Consumers working on DIY projects make up about three-quarters of Rowe’s sales, a higher percentage than rival Home Depots. So far, the company has not yet seen a material decline from these consumers.

However, consumers are beginning to feel a pinch due to rising energy prices. Ellison told CNBC that Rowe’s customers are replacing battery-powered landscaping tools, lawnmowers, and more fuel-efficient washing machines.

“Do you think it has something to do with fuel prices? The answer is absolutely there,” he said.

Loews Below Wall Street’s expectations for quarterly salesHowever, executives chalked retailers’ disappointing performance against the weather.

Walmart, Target, Home Depot, Lowe tell us about the economy

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