Retail Earnings Preview: What To Expect From Target, TJX Companies And Walmart This Week

Retail earnings season is ramping up. Target Corp (NYSE: TGT) and TJX Companies Inc (NYSE: TJX) are set to report before the market opens Wednesday, and Walmart Inc (NYSE: WMT) will turn in its quarterly results the following day. 

What To Know: Home Depot Inc (NYSE: HD) reported weak financial results Tuesday morning. The home improvement retailer barely beat on earnings, but it missed on the top line as comps fell 4.5% year-over-year. Home Depot also lowered its full-year outlook, which could dampen expectations for other retail names.

All eyes are turning to Target tomorrow as the company will provide a better read on the overall state of consumer spending.

Target is expected to report earnings of $1.76 per share on revenue of $25.29 billion. Although revenue is expected to be approximately flat year-over-year, earnings expectations are significantly lower. In the first quarter of 2022, Target missed estimates of $3.07 per share, turning in disappointing earnings of just $2.19 per share. 

In the retailer's most recent quarter, however, Target beat earnings estimates on the back of an increase in guest traffic. The company said strength in Food & Beverage and Beauty and Household Essentials offset ongoing softness in discretionary categories. 

See Also: Discretionary Spending Slows: How It Impacts Target's Near-Term Gross Margins

Investors will want to watch for continued softness in discretionary spending. Target provided a wide guidance range, expecting first-quarter comparable sales to range anywhere from a low-single digit decline to a low-single digit increase. 

It's possible that consumers are reining in spending given high inflation. If that's the case, TJX could be a beneficiary. 

TJX Companies is expected to report first-quarter earnings of 71 cents per share on revenue of $11.82 billion. Analysts are looking for earnings and revenue to have ticked higher year-over-year, much different than where the bar is set for Target. 

In the first quarter of 2022, TJX beat on earnings, but missed top-line estimates. In the off-price retailer's most recent quarter, TJX said it saw comps increase alongside foot traffic. 

The company guided for another increase in comps in the first quarter, as well as improved profit margins. At the time, TJX said the first quarter was off to a "strong start" and reiterated confidence in improving its profitability throughout the year.

Check This Out: Retail Sales Rebound In April; Investors Widely Expect Fed Pause In June

Walmart will round out the big retail earnings this week. The retail juggernaut is expected to report first-quarter earnings of $1.31 per share on revenue of $148.52 billion.

Walmart has beat top-line estimates for 12 quarters straight. Profitability will be in focus, as the retailer hasn't missed earnings estimates since the first quarter of last year. 

In the fourth quarter, Walmart reported strong revenue growth and comps and said it continued to make progress on inventory and cost challenges. CEO Doug McMillon noted that Walmart was "well-positioned to start this fiscal year."

TGT, TJX, WMT Price Action: On Tuesday, Target was down 2.3% at $156.91, TJX was down 1.3% at $78.21 and Walmart was down 1.38% at $149.78, per Benzinga Pro.

Photo: courtesy of Target.