Groceries are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025.As tariffs spark worries of higher prices, Walmart is dangling more discounts for its own employees.The largest private U.S. employer said Wednesday that it will offer a 10% employee discount on nearly all groceries, including milk, meat and frozen food. That discount previously applied to fresh produce and most general merchandise items, such as clothing and toys, but only to other food during the holiday season.In a memo to emp ...

Amazon rolls out same-day delivery of perishable groceries in 1,000 US cities | TechCrunch https://t.co/JUDkFsJfXz ...

Supply Chain & Trade - Groceries from Iran are being sold covertly and on a large scale to unsuspecting customers across the Gulf region [1] - This includes countries that claim to import no goods from Iran [1]

Group 1 - Kroger is set to announce its fiscal first-quarter earnings on June 20, 2025, with analysts expecting earnings of $1.46 per share and revenue of $45.3 billion, indicating a 12% year-over-year increase in earnings while sales growth remains flat [2] - In FY 2024, Kroger's same-store sales increased by 1.5%, and gross margin improved by 50 basis points to 22.3%, although adjusted EPS fell by 6% [3] - The company has a market capitalization of $44 billion, generated $147 billion in revenue over the last twelve months, and reported $3.8 billion in operating profits and $2.7 billion in net income [4] Group 2 - Historical trends indicate that Kroger's stock has risen 55% of the time after earnings announcements, with a median increase of 5.4% in one day [2][6] - The percentage of positive one-day returns post-earnings increases to 64% when analyzing data from the past three years, with a median of 5.4% for positive returns and -3.0% for negative returns [6][8] - The company plans to mitigate risks from trade tensions and tariffs by diversifying suppliers and optimizing its supply chain, although the recent departure of CEO Rodney McMullen may complicate these efforts [4]

Core Viewpoint - Target is facing significant challenges, with sales declining and stock prices dropping over 60% from their peak, marking the worst performance since the 1990s, but the company is not considered to be dying and has a fundamentally sound financial foundation [1][4][7]. Group 1: Sales and Market Conditions - Target's sales have plateaued and started to decline due to various factors, including increased financial strain on consumers primarily caused by rampant inflation [4]. - Groceries and household essentials accounted for only 40.5% of total merchandise sales last year, meaning that when consumers cut back on discretionary spending, Target is significantly impacted [5]. - Consumer sentiment has dropped to its lowest level since July 2022, exacerbated by tariff uncertainties [5]. Group 2: Company Policies and Backlash - Target faced backlash from shoppers due to its decision to roll back diversity, equity, and inclusion (DEI) policies, leading to a 40-day boycott that began in early March [6]. - Merchandise sales dropped 3.1% year over year in Q1 2025, following a 3.2% decline in Q1 2024, indicating ongoing struggles [6]. Group 3: Financial Stability - Despite challenges, Target maintains a solid financial foundation, with a dividend yield of 4.4% and annual dividend spending of $2 billion, while generating over $3.5 billion in free cash flow over the past year [7][8]. - Target has nearly $2.9 billion in cash, sufficient to fund dividends for a year, and holds an investment-grade credit rating, allowing time to rethink business strategies [8]. Group 4: Growth Plans - Target plans to open 300 new stores over the next decade, increasing its footprint by approximately 15%, indicating a commitment to growth despite current challenges [10]. - The company has less than half the number of stores as Walmart, suggesting that the U.S. market can support further expansion [10]. Group 5: Valuation and Investment Potential - Target's stock is currently priced at a price-to-earnings ratio of 11, significantly lower than Walmart's 41, reflecting pessimistic market expectations [11]. - If Target maintains its 4.4% dividend and achieves mid-single-digit earnings growth, it could generate double-digit annualized investment returns, improving sentiment towards the stock [12]. Group 6: Conclusion - The stock is positioned for potential improvement, as it would require a complete failure for the stock not to recover somewhat from current levels, making it an attractive option for investors seeking dividends while waiting for recovery [13].

Inflation and Pricing Trends - Food at home index increased by 03% in May, contrasting with a decrease of 04% in April [1] - Supply and demand issues, rather than tariffs, are significant contributors to cost increases, particularly concerning herd sizes which are at a 40-50 year low [4] - Increased fuel, labor, and energy prices are putting pressure on suppliers [17] Tariff Impact - Tariffs are impacting small suppliers, with a 10% tariff on bananas being split between the importer and the company, each absorbing 5% [7] - Specific tariffed items include bananas, pineapples, wines, and champagne from Europe [6][7] - Some products like avocados and salmon are not subject to tariffs [7] Consumer Behavior and Savings - Customers are generally feeling confident, and the company has not yet raised prices due to tariffs [3] - The company avoids raising prices because even a small increase (e g, from $499 to $509) can decrease sales [13] - Customers can save by checking specials, using apps, and trying private label products, which can offer savings of around 20% [14][15] - Sampling demos in stores can double or triple sales of an item [16] Local Produce and Supply - Local produce and fruits/vegetables are currently in season, providing good opportunities [9] - The US relies on imports for tropical fruits like pineapples and bananas due to limited domestic growing regions [11][9] - Lobster prices have decreased in the US due to high tariffs on US exports to China, resulting in ample domestic supply [8] Food Recalls - Food recalls are unpredictable and require quick reaction to clear shelves and notify customers [12]

Core Viewpoint - The retail sector is facing significant tariff risks that can increase costs for businesses, impacting profits and pricing strategies for consumers [1] Group 1: Walmart - Walmart reported quarterly sales of $165.6 billion, a 4% increase excluding foreign exchange effects, with operating income rising over 4% to $7.1 billion [4] - Approximately 60% of Walmart's sales come from grocery operations, making it more resilient to tariff impacts compared to other retailers [5] - The stock has increased by over 7% this year, trading at more than 41 times its trailing earnings, indicating stability for long-term investors [6] Group 2: Costco Wholesale - Costco's comparable revenue growth was 8%, with total revenue reaching $63.2 billion and net income increasing by 13% to $1.9 billion [7] - Tariffs have raised costs for Costco, leading to price increases, but bulk purchasing allows consumers to save money [8] - The stock is up 9% this year but trades at 57 times its trailing earnings, suggesting potential overvaluation and risk if economic conditions worsen [9][10] Group 3: Dick's Sporting Goods - Dick's Sporting Goods announced plans to acquire Foot Locker for $2.4 billion, aiming to expand its customer base [11] - The company achieved a same-store sales growth of 4.5%, marking five consecutive quarters of over 4% growth, despite an 11% decline in net income to $264 million [12] - The stock has declined over 20% this year but trades at just 13 times its trailing earnings, presenting a potential value buy for long-term investors [13][14]

Economic Outlook - The probability of a U.S. recession in 2025 is decreasing from a peak of 60% to below 50% due to the Trump administration easing aggressive tariff policies, which has allowed the S&P 500 to recover from a correction in March [1] Company Analysis Walmart (WMT) - Walmart has historically thrived during recessions due to its essential grocery offerings and reputation for affordability, attracting budget-conscious customers [3] - Approximately two-thirds of Walmart's inventory is produced in the U.S., providing a buffer against global trade tensions [4] - Over the past year, Walmart has achieved a 47% return, significantly outperforming the S&P 500's 10% return, with analysts optimistic about steady growth in the coming months [4] HCA Healthcare (HCA) - HCA Healthcare is the largest non-governmental hospital chain in the U.S. and has shown resilience during economic downturns, particularly in critical care sectors [5] - The company reported a remarkable growth of +236.97% and aims for a 29% market share by 2030 [5] - Cantor Fitzgerald raised its price target for HCA from $405 to $444, indicating a potential 16% upside from the stock's previous closing price [6] Waste Management (WM) - Waste Management has experienced a +135.87% growth over the past five years, as demand for waste collection and recycling services remains stable during recessions [9] - The waste management industry is projected to grow at a compound annual growth rate (CAGR) of 5.4% by 2030, driven by advancements in recycling technologies and increasing environmental awareness [10] - Recent evaluations by JPMorgan indicate optimism regarding WM's growth prospects, with a valuation of approximately 16x forward-year EV/EBITDA and a free cash flow yield of 3% [11]

Group 1: Market Overview - The announcement of a tariff deal between the U.S. and China has led to a 5% increase in the S&P 500, bringing it back into a year-to-date gain [1] - Despite the positive market reaction, tariffs have not been completely eliminated, and companies remain cautious about potential negative impacts [2] Group 2: Walmart's Performance - Walmart reported a solid earnings report for fiscal Q1 2026, with sales increasing by 2.5% year over year and operating income up by 4.3% [4] - E-commerce continues to be a significant growth driver for Walmart, with a 22% increase in the quarter, and advertising sales rose by 50% [4] Group 3: Impact of Tariffs on Walmart - Walmart's management acknowledged the impact of new tariffs that began in late April, but they did not change their original guidance for fiscal 2026 [5] - CEO Doug McMillon indicated that the company cannot absorb all the pressure from tariffs due to narrow retail margins [13] - Walmart's profit margin is crucial, as it is the largest company in the world by sales, with $685 billion in trailing-12-month sales [12] Group 4: Pricing Strategy and Mitigation - Walmart's scale allows it to leverage suppliers effectively, maintaining affordability despite potential price hikes [6][7] - The company plans to mitigate tariff impacts by adjusting supplier packaging and increasing U.S.-based production, while also absorbing some tariff costs on certain products [14] - Management remains optimistic about achieving full-year guidance for both sales and operating income despite uncertainties [15]

Core Viewpoint - Home Depot is committed to maintaining stable prices despite tariff pressures, contrasting with competitors like Walmart who may need to raise prices due to increased costs from tariffs [1][4]. Group 1: Home Depot's Strategy - Home Depot is actively working with suppliers to shift production away from China and is negotiating for price concessions to protect consumers from the trade war's impact [1]. - The company's CFO, Richard McPhail, stated that no single country outside the U.S. will account for more than 10% of their purchases in the next 12 months [2]. - Home Depot has not altered its financial forecast for 2025, reporting a 0.2% increase in U.S. comparable sales and a 2.1% rise in customer transactions to 394.8 million [3]. Group 2: Competitive Landscape - Unlike Home Depot, Walmart has indicated it may need to raise prices to cope with tariff-related costs, with CEO Doug McMillon acknowledging the pressure on their business [4]. - President Trump criticized Walmart for not absorbing tariff costs, suggesting that the company should maintain its profit margins without passing costs to consumers [5][6]. - The White House supports Trump's stance that foreign countries should bear the burden of tariffs, emphasizing that businesses should not pass these costs onto consumers [5][6]. Group 3: Broader Economic Context - Trump's administration has implemented sweeping tariffs, with rates of 10% on most imports and up to 30% on goods from China, which has led to increased scrutiny on how companies manage their pricing strategies [9][10]. - The President's comments reflect a shift in his approach, as he previously criticized price control proposals, now advocating for businesses to absorb tariff costs [9].