Key Retail Earnings Reports: Walmart, Target, and Home Depot - Q3 2024 Analysis

Walmart Q3 24 – 16/11 –

has been a significant stand out when it comes to the US retail sector, the shares have made strong gains this year with the shares hitting record highs earlier this month. The US consumer has held up well this year with Q3 seeing personal consumption contributing 4% to US GDP growth. There is a danger however that could be as good as it gets as we head into the final quarter of 2023 and Q4. When Walmart reported in August they crushed expectations, growing revenues, and profits. Q2 revenues rose 5.7% to $161.63bn, while profits came in at $1.84c a share. Total same-store sales rose by 6.3%, with the retailer raising its forecasts for the full year. Walmart said it expected Q3 profits to come in between $1.45 to $1.50c, while raising its full year profit forecast to between $6.36 to $6.46 from between $6.10 and $6.20 a share. Full year net sales were raised to between 4% and 4.5%.

Target Q3 24 – 15/11 –

while Walmart has been sweeping all before it, Target has gone in the other direction the shares slipping towards their 2020 lows, the retailer has been struggling with higher costs, and several cuts to their guidance, with management warning of "shrinkage" impacting its margins, given that several of their stores are in less salubrious geographic locations. Q2 revenues slowed to $24.38bn, falling short of expectations, although profits saw a solid increase to $1.80 a share, comfortably beating the top end of forecasts of $1.70 a share. Target also downgraded its full year profits forecast from $7.75 to $8.75 to between $7 and $8 a share. The retailer also projected Q3 profits of between $1.20 and $1.60 a share, although it is noteworthy that there has been an improvement in operating margins, which would appear to account for the better profit numbers and could prompt a surprise to the upside in this week's numbers. Q3 revenues are expected to come in at $25.1bn.

 

Home Depot - Q3 24 – 14/11 –

in the leadup to Home Depot's Q2 numbers the share hit a 6-month high, however those gains quickly disappeared with the shares sliding to their lowest levels this year at the end of October. The sharp falls in the aftermath of the Q2 numbers were somewhat surprising given that the results came in ahead of forecasts. Back in May the company cut its full year forecasts sending the shares sharply lower. Q2 revenues saw a modest decline from last year to $42.9bn, as same store sales growth declined by -2%. Profits also beat consensus coming in at $4.65c a share. The outlook for the second half of the year is more uncertain with the company reaffirming its guidance from May for same store sales to decline between 2% and 5%. The retailer also outlined a new $15bn share buyback, however this wasn't enough to stop the shares from sliding back, with the uncertainty offered for the second half of the year perhaps the main reason for the share price weakness seen since then. Q3 revenues are expected to come in at $37.87bn, while same-store sales are expected to decline by 3%. Profits are forecast to slow to $3.82c a share.