The wild swings in consumer stocks this week which erased $500 billion in market value are far from over with earnings reports from well-known retailers like Dollar General Corp. and Costco Wholesale Corp. still to come.
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The volatility in consumer stocks reached levels not seen since the early days of the Pandemic-driven rout as retailers from Walmart to Target Corp. cut their annual profit forecasts and raised concerns over the impact of rising inflation and the challenge to pass higher costs to consumers.
Walmart and Target have posted their biggest one-day declines since 1987, with selloffs of 19% and 29% this week. Since Walmart's drop, Procter Gamble Co. has overtaken the retailer as the biggest company in the S&P 500 Consumer Staples Index by market value.
Ross Stores Inc. has had its lowest decline in data since 1985, as it trims its forecasts for comparable sales and profit.
The implications for retailers that have yet to report are not promising, said John Zolidis, president of Quo Vadis Capital, after Walmart and Target's bleak updates. Several brokerage firms, including Truist Securities and Oppenheimer, have trimmed profit expectations for retailers that have yet to release quarterly results, including Dollar General and Costco.
Gap Inc., which will report earnings after markets close on May 26, slashed its quarterly sales outlook on macroeconomic dynamics and execution challenges at its Old Navy brand, forewarned investors last month.
Here s a look at some of the other notable retailers that are due to report next week:
The department store operator will report first-quarter results ahead of the bell on May 26th. The stock has gone down 31% this year, after more than doubled in 2021, with the company benefiting from pent-up demand as consumer mobility resumed. According to Bloomberg, the share price is likely to be volatile after earnings, with an implied one-day move of 14%.
The discount retailer reported earnings on May 26. After it releases its results, its stock is expected to move more than 8% in either direction, according to data compiled by Bloomberg. That is bigger than the moves seen after the last eight quarterly reports were issued. Dollar General's value has declined 20% this year.
After BJ's Wholesale Club Holdings Inc. bucked the trend this week and reported earnings and sales that grew in the quarter, all eyes are on Costco. As one of the few retailers that still reports monthly sales, the company's net sales for April increased 13.9% year-over-year, after climbing 18.7% in March. Costco, which is due to report on May 26, has slumped 27% this year.
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