Walmart earnings, retail sales – What to know in the week ahead

Another wave of earnings reports and economic data releases will try to pull focus from the concerns of escalating trade tensions that weighed on markets last week.

The Commerce Department’s release of April advance retail sales data on Thursday will be a centerpiece of this week’s economic calendar as investors look for signs that consumer spending – the biggest part of the domestic economy – is on the upswing.

Economists are looking for retail sales to have risen 0.2% month-over-month in April, and for the metric excluding the volatile categories of automobile and gas sales to have risen 0.9%.

Recently, data tracking underlying consumption has been turbulent. After unexpectedly declining in February, retail sales jumped 1.6% in March – the fastest rate since September 2017 – amid higher spending on autos, gas, furniture and apparel. Stripping away auto and gas sales, retail sales still rose a solid 0.9% for the month. The data came amid a March employment report that topped expectations, further adding to evidence of a strong consumer.

But consumption as reflected in the most recent print on first-quarter gross domestic product, for which retail sales is an input, was tepid. Consumer spending rose only 1.2% in the first quarter, down from a healthy 2.5% clip in the fourth quarter.

Nevertheless, many analysts are expecting April’s data to add to gains seen in March.

“We forecast a solid retail sales report for April, extending the March rebound in consumer spending,” UBS economist Seth Carpenter wrote in a note Friday. “Around the turn of the year, retail sales had stepped down amid the broad weakness in activity, but they rebounded in March, and we expect a renewed upward trend in consumer spending throughout Q2.”

Meanwhile, America’s biggest retailer will report quarterly results, providing yet another indication of the health of U.S. consumers and the business that cater to them.

Walmart (WMT) reports its fiscal first-quarter earnings before market open on Thursday, with consensus analysts expecting the retail behemoth to deliver adjusted earnings of $1.02 per share on revenue of $125.04 billion. The company has guided toward a year-over-year decline in operating income and adjusted EPS in its first quarter due in part to its $16 billion acquisition of money-losing Indian e-commerce company Flipkart. However, Walmart expects to see both metrics turn around through the end of the year.

The retailer reported much stronger-than-expected sales in its last earnings report, with U.S. comparable sales up 4.2% from the year earlier. That marked its biggest holiday quarter leap in U.S. same-store sales in at least a decade.

Notably, e-commerce sales grew 43% from a year earlier, suggesting the company has smoothed out its digital retail playbook to better compete with the likes of Amazon (AMZN), along with other brick-and-mortar retailers like Target (TGT) that have recently tried to bump up their online strategies. The company has guided toward 35% U.S. e-commerce growth for the full-year 2019.

Shares of Walmart have risen 9.4% for the year-to-date through Friday’s close, versus the S&P 500’s 15% gain.

Earnings calendar

Monday: Tencent Music Entertainment (TME), Take-Two Interactive Software (TTWO) after market close

Tuesday: Amdocs Limited (DOX), Ralph Lauren (RL) before market open; Agilent Technologies (A), Tilray (TLRY) after market close

Wednesday: Alibaba (BABA), Macy’s (M), The Children’s Place (PLCE), Virtusa Corporation (VRTU) before market open; Cisco (CSCO) after market close

Thursday: Walmart (WMT) before market open; Applied Materials (AMAT), Baidu (BIDU), Nvidia (NVDA) after market close

Friday: Deere & Company (DE) before marker open