Tuesday August 17, 2021
News Retail sales July figures were released ahead of the bell on Tuesday, showing a sharp drop from expectations and month over month: -1.1% was almost 4 times worse than the expected -0.3%. This follows the + 0.7% revised upwards compared to June. It also shows that despite a generally robust grand reopening, monthly retail sales figures have been in negative 3 territory over the past 6 months.
Subtracting volatile auto sales for the month, that number drops to -0.4%, twice as low as expected. Minus gasoline prices, we are at -1.4%. The control count, which is connected to a large number of other economical readings, was also lower than expected, -1%. From there, it looks like the very dynamic auto market – both for new and used vehicles – has cooled down. But is this still part of the supply constraint issues that have limited new car inventories or a slowdown in demand?
We may also wish to examine whether the Delta variant of Covid-19, which started generating a legitimate fourth wave of coronavirus last month, has anything to do with declining retail sales figures. Certain regions of the country, including the South / South-East, which experienced faster economic growth, are now also in the grip of this fourth wave. This would necessarily dampen retail demand.
Speaking of retail, Walmart (WMT – Free report) easily pulled up earnings and earnings estimates this morning, posting $ 1.78 per share (well above the expected $ 1.56) on sales of $ 141.05 billion, which rose to a 2.4% positive result compared to expectations. This represents the highest quarter of revenue unrelated to the holiday season in the company’s history. Still, stocks fell 1% on news before turning positive half an hour before the market opened.
While same-store sales rose 5.2%, above the 3.3% sought by analysts, a sharp slowdown in e-commerce sales for the quarter made investors aware: only 6% growth e-commerce in Q2 was an extreme slowdown from the over 90% growth in e-commerce we saw at the height of the pandemic. That said, earnings guidance for the full year has been raised to $ 6.20-6.35 per share; Zacks consensus was expecting $ 6.00. To learn more about WMT’s revenue, click here.
Home deposit (HD – Free report) Also beat earnings expectations: $ 4.53 per share of $ 41.12 billion topped $ 4.43 per share and $ 40.71 billion, representing double-digit earnings growth and an 8.1% revenue increase. Same store sales disappointed a bit at + 4.5% on a -5.8% drop in customer transactions, although average revenue increased 11.3% on higher costs. The shares are -3.3% on the news. To learn more about HD gains, click here.
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