Previewing Retail Sector Earnings: A Closer Look

Core Insights - Walmart (WMT) shares have significantly outperformed the broader market, brick-and-mortar retail peers, and Amazon (AMZN), with a year-to-date increase of +20.2% [1][2] - The upcoming quarterly results on February 19th will be crucial in determining if Walmart can sustain its stock momentum [1] Performance Comparison - Walmart's performance is notably better than the Magnificent 7 group, which is down -5.4%, the S&P 500 index down -0.4%, and Amazon down -13.9% [2] - Target shares have also performed well, up +18.2%, but Walmart's growth remains superior [2] E-commerce and Market Share - Walmart's stock performance reflects optimism about its expanding digital business, which includes third-party fulfillment and advertising opportunities [5] - The e-commerce segment is now profitable and is expected to contribute significantly to earnings by 2026, currently accounting for approximately 15% of total sales [11] - Walmart has gained market share among higher-income households, driven by inflation and enhanced e-commerce capabilities [9] Financial Expectations - Walmart is projected to report earnings of $0.73 per share on revenues of $189.9 billion, reflecting year-over-year increases of +10.6% and +5.2% respectively [14] - Same-store sales in the U.S. (excluding fuel) are expected to grow by +4.17%, slightly lower than the previous quarter's +4.4% [15] Retail Sector Overview - As of now, 371 S&P 500 members have reported Q4 results, showing a total earnings increase of +12.8% year-over-year on +8.8% higher revenues [7][23] - The retail sector is expected to dominate the upcoming earnings reports, with Walmart being a key player [7] Tariffs and Supply Chain - Approximately two-thirds of Walmart's U.S. sales come from domestically sourced products, providing some insulation from tariff impacts [12] - Walmart's grocery business, which constitutes nearly 60% of its sales, plays a significant role in its resilience against tariffs [12]