WMT - Walmart earnings said to be key for consumer pass-through on higher food prices
Wells Fargo notes that food PPI accelerated in April for the third consecutive month in what could be a signal that is meaningful for food service and retail. Analyst Edward Kelly: "We view the strengthening PPI data as a net positive read-through for the food distributors, as they typically exhibit gross profit per case growth during inflationary periods. We maintain our neutral to cautious view on the grocers, as the pass-through to consumers may be more difficult in an environment where players are fighting to retain share post-COVID and promotions normalize." The firm thinks that Walmart's (WMT) Q1 earnings next week will represent an important update on the outlook for industry pass-through. Companies that will be watching Walmart's earnings for color on food pricing may include Kroger (KR), Albertsons (ACI) and Sprouts Farmers Market (SFM). Food suppliers with an eye on food PPI include Chefs' Warehouse (CHEF), US Foods (USFD), Sysco
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Walmart earnings said to be key for consumer pass-through on higher food prices