BBWI - 7 Earnings Reports to Watch Next Week

Earnings from major U.S. retailers take center stage next week, providing a gauge of how consumer spending is holding up with the economy nearly fully reopened. After strong earnings from banks and technology companies, Wall Street analysts and investors will be watching earnings reports to see how consumer spending is driving the economy forward.

As the single biggest component the U.S. economy, consumer spending accounts for 70% of the country’s gross domestic product (GDP). And, by all accounts, consumer spending is red hot right now. In the second quarter of this year, consumer spending in America rose at an annualized rate of 11.8%, the second-largest increase since 1952 as vaccinations, government support and the reopening of the economy created favorable conditions for people to get out of the house and spend money.

American consumer confidence was found to be at a 17-month high in July, bolstering the outlook for the remainder of this year. In the coming days we’ll get quarterly financial results from retailers covering broad swaths of the economy, from home furnishings and renovations to personal care products and sports equipment.

Here are seven retailers reporting earnings the week of Aug. 16:

• Walmart (NYSE:WMT)
• Home Depot (NYSE:HD)
• La-Z-Boy (NYSE:LZB)
• Target (NYSE:TGT)
• Bath & Body Works (NYSE:BBWI)
• Macy’s (NYSE:M)
• Foot Locker (NYSE:FL)

Earnings Reports Next Week: Walmart (WMT)

The week kick’s off with earnings from the world’s biggest brick-and-mortar retailer, Walmart. Analysts will be watching on Aug. 17 to see if the Bentonville, Arkansas company’s sales are slowing coming out of the pandemic as consumers visit a variety of reopened retailers. Wall Street will also be watching for any slowdown in Walmart’s booming online sales, which grew 79% in the company’s 2021 fiscal year ended on January 29. Strong online sales helped Walmart record revenue of $559 billion for fiscal 2021.

Analysts are forecasting that Walmart will report earnings per share (EPS) of $1.54 on revenues of $135.92 billion for the quarter ended June 30. The company beat analysts’ estimates in the previous quarter, posting EPS of $1.69 compared to $1.21 that was expected, and revenue that amounted to $138.31 billion versus $131.97 billion expected. Walmart is spending $14 billion this year to improve its supply chains and further automate its global operations. WMT stock has underperformed year to date, up a modest 4% at $149.38 per share at the start of Aug. 13.

Home Depot (HD)

Home Depot is another mighty big box retailer on deck to report earnings in the coming week. Analysts will be scrutinizing the leading home improvement retailer to not only gauge how consumer spending is holding up but also the housing market. Much of Home Depot’s success comes from home builders purchasing its lumber and other construction materials. Owing to hot housing markets in both the U.S. and neighboring Canada, Atlanta, Georgia-based Home Depot saw its net sales rise 20% last year to a record $132 billion.

Can the retailer keep it up? We’ll find out when Home Depot reports its latest results on Aug. 17. Analysts are calling for the company to report EPS of $4.39 on revenues of $40.4 billion. HD stock has outpaced the share prices of other major American retailers this year, including Walmart. Since January, Home Depot’s shares have climbed 25% to $333.86 per share. Investors interested in buying Home Depot stock following the latest earnings should also know that the company pays a healthy quarterly dividend that yields 2%.

Earnings Reports Next Week: La-Z-Boy (LZB)

The furniture manufacturer and king of recliners also reports earnings on Aug. 17 and shareholders will, no doubt, be hoping for some good news from the Monroe, Michigan-based company. LZB stock has struggled this year and fallen 10% in the past six months to $36.34 a share as of Aug. 13. The decline has come after the company said that higher prices for raw materials are eating into its profits. Nevertheless, the company has said that demand for its furniture products remains strong and its backlog of orders are at record levels this year.

Wall Street is looking for the company to report EPS of 57 cents on revenues of $485.96 million. In its previous quarter, La-Z-Boy reported EPS of 87 cents and beat expectations of 74 cents. Revenues came in at $519.5 million, up 41% from a year earlier and higher than analysts expected. Same-store sales for the company rose by 31% in the previous quarter. By most metrics, La-Z-Boy is performing well. Only higher raw material prices and supply chain constraints appear to be weighing on the stock right now.

Target (TGT)

Minneapolis-based Target, which is the eighth largest retailer in the U.S., announces results on Aug. 18. Expectations are high among analysts and shareholders. Year-to-date, TGT stock is up an impressive 48% at $262.69. The company and its share price have benefitted from the economic reopening that has most of the company’s nearly 2,000 stores reopened. Target performed well during the pandemic, growing its sales a healthy 20% last year while bolstering its e-commerce business as consumers turned to the retailer for groceries and household goods.

Target is another company that pays a healthy dividend. The retailer has increased its quarterly payout every year since 1971 and today provides a dividend yield of 1.4%. In June of this year, the company boosted its quarterly dividend by 32% to 90 cents, a reflection of its ongoing success. Analysts and investors will be watching to see if Target can keep the good times rolling when it releases its latest earnings. The consensus is for the company to report EPS of $3.38 and revenues of $24.78 billion.

Earnings Reports Next Week: Bath & Body Works (BBWI)

Bath & Body Works will report its first earnings on Aug. 19 after it separated from Victoria’s Secret (NYSE:VSCO), effectively ending the combined retailers’ previous company L Brands, which traded as LB. (Victoria’s Secret reports earnings on Aug. 19 as well). Analysts are curious to see how Bath & Body Works performs on its own without the more flashy lingerie items sold by Victoria’s Secret. Investors will want some reassurance that Bath & Body Works can succeed on its own. Since the split in early August, BBWI stock has dropped 4% and now trades at $62.58 per share.

While this will be Bath & Body Works’ first earnings report on its own, L Brands had performed strongly previously, announcing first quarter EPS of $1.25 compared to $1.21 expected by Wall Street. Q1 revenues totaled $3.02 billion compared to $3.01 billion expected. In reporting the first quarter earnings, L Brands said that same-store sales at Bath & Body Works rose 16%, a marked slowdown from a 41% increase in same store sales a year earlier when consumers were stockpiling hand sanitizers and other items at the height of the pandemic.

Macy’s (M)

On Aug. 19, we’ll hear from Macy’s department stores. The New York-based retail giant is coming off a strong first quarter that saw its revenue grow by 57% year-over-year to $4.7 billion. The company credited the sales increase to government stimulus checks that have kept consumers buoyant, as well as relaxing Covid-19 restrictions that have increased foot traffic at its 725 retail outlets. Macy’s used the pandemic to get leaner, closing many of its worst-performing store locations and opening more of its popular “Macy’s Backstage” discount stores.

For its latest quarter, analysts are looking for Macy’s to report EPS of 13 cents on revenues of $4.96 billion. Any surprise to the upside will likely propel M stock higher. Year-to-date, the company’s share price has been going gangbusters, up 71% since the first trading day of 2021. At $19.20 a share, the stock is still quite affordable and trades today at a forward price to earnings ratio of 9.95.

Earnings Reports Next Week: Foot Locker (FL)

Lastly, we’ll hear from Foot Locker on August 20. The New York-based footwear and sportswear company is another retailer whose stock has performed incredibly well this year, up 39% on the year at $56.59 per share at the start of Aug. 13. Despite the impressive run, many analysts think FL stock still has some gas left in the tank and could be propelled higher by its strong and growing digital business. Foot Locker is an interesting turnaround story.

After struggling for most of the past decade, the company today sells sneakers, clothing and sports equipment at over 3,000 stores around the world,  as well as several digital channels and a direct mail business. In the first quarter of this year, Foot Locker reported EPS of $1.96, crushing the $1.09 that analysts had forecast. The company’s digital segment grew 43% and accounted for one-fourth of total sales in the first quarter. For its latest earnings, analysts expect EPS of $1.00 on revenues of $2.08 billion.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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