5/18/2023: Walmart and Target Beat Earnings Expectations
Strong revenue growth for Walmart; Weak for Target
Walmart and Target reported their most recent quarterly warnings in the past couple of days. Target’s revenue was $25.32B vs. $25.29B expected. EPS was $2.05 vs. $1.76 expected. Walmart’s revenue was $152.30B vs. $148.76B expected. Adjusted EPS was $1.47 vs. $1.32. Target’s revenue was flat YoY while Walmart’s revenue grew 7.6% YoY!! Walmart attributed the growth to more affluent shoppers shopping at Walmart while affluent Target customers shopped less discretionary items. Walmart also said that customers spent more on groceries and essentials and less on discretionary, indicating pressure from inflation and a slowing economy. Target’s stock tanked after the report while Walmart stock soared.
Discount retailers, movie theaters and coffee shops are businesses that historically do well in a slowing economy. But the last recession before the pandemic was ages ago before Facebook, iPhone and Netflix Streaming went mainstream. It will be interesting to see what consumers cannot live without during challenging times in our hyper connected world. It does appear that people shop more at discount retailers like Walmart and still drink fancy coffees from Starbucks. But instead of going to movie theaters, they are staying home watching Netflix or scrolling endlessly through TikTok or YouTube.