Retail earnings: What to expect as Walmart, Target, Home Depot report results

Yahoo Finance Live anchors discuss the earnings expectations for big retailers this week.

Video transcript

- I keep talking about inventory this morning. So let's talk about the industry that has been most affecting, that's retail, of course. Looking ahead to a busy week, all the major retailers, or many of the major retailers, are set to report their numbers. We're going to have Walmart on Tuesday, I believe Home Depot is on Tuesday, Target, and TJX coming to us on Wednesday. And, obviously, we will see some kind of confirmation or not, or maybe signs of improvement with some of these retailers. Now, on the plus side, gasoline prices have come way down, right? How many straight days do we have now with gasoline prices falling? I believe GasBuddy brought us the numbers this morning. 61st.

- 60. Wow. OK. I'm off.

- Straight day the gas prices, average gas prices are down nationally again, according to GasBuddy. $3.92 a gallon. I think I saw in the $3.50s this weekend in New Jersey.

- I paid $5.09. But I got the premium stuff, Julie. I got the premium stuff. I'm not putting $.87 in my hot rod, no way. No way. Well, look, retail, we've been talking. We talked a little bit about this last week. Inventory levels year over year, what does that look like for retailers? I think a lot of folks on the street are bracing for very bad margins and earnings misses from a Walmart, Target, maybe a Home Depot, they've been buying back a lot of their stock, but a Lowe's. And that was I think suggested by Weber this morning, awful quarter from this company that sells in the both Home Depot and Lowe's.

But anyway, looking for a lot of weakness on margins, high inventory growth, and potentially weak outlooks for the third quarter. The saving grace here could be how are these companies guiding for back to school sales. Now, you noted gas prices are down. Has that fed through into how back to school started? Not sure.

- Yeah. And we're amidst that season right now. Some schools preparing or have already started to go back. And then you think about as well on the e-commerce side too, I think that's going to be critical to look at this earnings season. Inventory, no doubt, has been this story of the past two quarters for retail. But now, you start to think about where consumer appetites are not even going to the websites to do searches, that could potentially show up in the e-commerce sales data.

And that's where we typically get into some of the different website-tracking tools that are out there. Amazon, for what it's worth, they had already seen traffic down over the course of this year coming into that last earnings results that came out earlier this quarter. And so, with all of that considered, I think on the e-commerce side if you're seeing similar with Amazon what you're seeing in some of-- or seeing similar with other retailers what we did see with Amazon, then that could potentially be one of those headwinds that they have to navigate through, despite all of the major investments that a Walmart and a Target has made on the e-commerce side.

- Something else important to mention as we go into this week of these earnings is how the stocks are setting up because they're actually, they've performed quite well.

- Target's been ripping higher like, 16%.

- So Target, so both Walmart and Target made their lows on June 17. Interestingly, Walmart did not make another low for the year, even after it cut its forecast. It fell, of course, but it didn't make another new low. So Walmart is up 12% since that low. Target is up 24% since its low on June 17. So if they do come out and disappoint again, do they cut further, et cetera. Is that priced into these stocks when they've had that recovery?

- They're getting hammered because that whole run, I think we talked about it, has really coincided with the plunging gas prices. So the street is hoping that consumers have taken these gas savings, went to Walmart, went to Target, and bought things. But that is wildly unclear. I track a lot of the week over week data, spending card data or credit card data from Citi and Bank of America. Sales have slowed. They have not picked up so far in back to school. So the outlooks could be pretty shocking. And probably one of the most weak sectors, and we were showing on that calendar, Kohl's. Some of these department stores, Kohl's, Nordstrom. You go to these stores right now, high levels of clearance, lots of inventory from summer not sold. That is bad.

- Well, because are still buying stuff, as we've talked about before. It's just what they're buying is different.

- Yes. And so to that point, because I forgot my green pompoms at home, but I did want to bring in DLTR, Dollar Tree, into the conversation too because when we do see, typically, historically when you see times of consumer confidence or consumer sentiment starting to wane, Dollar Tree is one of those names where they will continue to go back to because you know everything in there is going to be $1.

- I like Dollar Tree.

- Yeah. And Dollar Tree is up year to date. Over the past year, it's up 64%.

- I get paper plates. I get paper plates from there. Yeah, it's great.

- I mean, well, better than Party City at that point.

- Yeah. Absolutely. I have no problem with it.

- Yeah. All right. Well, that's my Dollar Tree.

- What? You didn't think I liked Dollar Tree? You think I just live on the high end? Go to Suit Supply and wait three weeks for custom suit? Well, we won't go there, though.

- I mean, you're putting premium gas in your vintage hot rod.

- Whatever. I go to Dollar Tree, I buy plates, OK?

- They got good plates there, good plastic ones too.