Walmart & Retail Sector Earnings Loom: A Closer Look

Core Insights - Walmart (WMT) shares have significantly outperformed the broader market and competitors like Target (TGT) and Amazon (AMZN) this year, with a year-to-date increase of +7.2% compared to the S&P 500 index's decline of -4.3% and Target's drop of -28.6% [1][3]. Financial Performance - Walmart is set to report quarterly results on May 15, with expectations of $0.58 in EPS and $165.6 billion in revenues, reflecting year-over-year changes of -3.3% in EPS and +2.5% in revenues [2][11]. - The company has achieved sales growth of +5.5% and operating income growth of +9.5% over the past two years, exceeding its long-term targets of at least +4% sales growth [6]. Market Position and Strategy - Approximately two-thirds of Walmart's U.S. sales come from domestically-sourced products, providing some insulation from tariff impacts, with groceries accounting for nearly 60% of sales [7]. - Walmart's commitment to maintaining a price advantage over competitors is supported by its size, supplier relationships, and automation in logistics [7]. - The growing e-commerce segment is not only attracting higher-income households but also contributing to higher-margin revenue streams such as advertising and third-party fulfillment [8][10]. Retail Sector Context - The retail sector is experiencing a positive trend, with Q1 earnings for retailers that have reported so far up +20.2% year-over-year on +6.9% higher revenues [9][15]. - Same-store sales (excluding fuel) for Walmart are expected to increase by +3.21% for the quarter, slightly down from +4.9% in the previous period [12]. Broader Industry Trends - The retail sector's earnings growth is being closely monitored, with 20 out of 33 S&P 500 retailers reporting Q1 results, indicating a shift in the competitive landscape as digital and brick-and-mortar operations converge [14][17]. - The overall earnings picture for the S&P 500 is showing a +12.2% increase in total earnings from the same period last year, with 73.7% of companies beating EPS estimates [22][24].