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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