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Walmart Earnings Report Will Be “The Barometer” Of Consumer Spending

By Cristian Bustos. Originally published at ValueWalk.

Walmart

Walmart Inc (NYSE:WMT) will report Q4 earnings on Thursday and experts are already touting the results as a way to measure the health of consumer spending. Amid the highest inflation in 40 years, retail sales of the company will depict how much American consumers are adjusting to the phenomenon.


Q4 2021 hedge fund letters, conferences and more

Retail Health

As reported by CNBC, Walmart is set to release its earnings report for the quarter on Thursday, and investors are already impatient to see how the retail giant did and therefore how consumers are coping with inflation.

Steph Wissink, a retail analyst for Jefferies, said, “The voice of Walmart carries more weight in the context of ‘How healthy is the consumer?’” and added that “any sort of wavering in behavior, they [investors] are going to detect it.”

The sales of the retail giant are seen as a barometer to measure consumer health and possible new spending habits.

As food prices have increased by 6.3% year-on-year and December’s consumer price index rose 7% from a year before, Americans have had to adapt to the phenomenon —something investors are desperate to confirm.

Positive Estimates

Some of the biggest consumer goods and food companies such as Procter & Gamble Co (NYSE:PG), Coca-Cola Co (NYSE:KO), and PepsiCo Inc (NASDAQ:PEP) have increased prices without much of a dent in sales.

Walmart sells several of these companies’ products, which is a clue in itself as to how the retailer fared in a tough quarter.

Positive estimates are already on the table as consumers kept spending during the holiday season, despite supply chain issues that drove out-of-stocks and shipping delays, and extra costs.

Amid inflationary pressures, John Furner, Walmart U.S. CEO, said in November during a call with analysts that the company would be “the last” major retailer to increase prices, given its good supplier relationships.

“We’ve got so many suppliers to work with and choose from… As the months progress, we expect to find more,” he said.

Walmart is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.

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