With many companies pointing to weakening consumer spending as a headwind, attention is now focused on Walmart’s (WMT) second quarter earnings, due to be released on Thursday, August 15. Michael Lasser, U.S. Hardline/Broadline and Food Retail Analyst at UBS, joins Market Domination to explain what investors need to know ahead of Walmart’s earnings release.
“We expect to hear that overall consumer response is stable. However, Walmart primarily sells groceries and household goods and is gaining market share, so what Walmart is experiencing is a little bit different than what other retailers are experiencing,” Lasser explained. He expects alternative revenue areas like advertising and membership fees to grow “very rapidly,” which has led to a recent surge in the stock price. He also expects Walmart to raise its full-year outlook, adding, “All of this means that the bull case for Walmart is alive and well and will likely support the stock price going forward.”
Lasser noted that while consumers will continue to face inflationary pressures, Walmart is likely to benefit because it is perceived to offer the “best value in retail.” As eating out remains a costly endeavor, consumers will turn to Walmart for affordable grocery purchases. Lasser explained that Walmart sells one in five groceries in the U.S., so it will benefit from the trend toward home cooking.
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This post was written by Melanie Leal