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Here's What The Street Is Saying As Retail Earnings Heat Up

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Here's What The Street Is Saying As Retail Earnings Heat Up

What shape is the consumer in? Were Macy's Inc (NYSE: M) poor earnings report indicative of the retail environment or should investors look instead at Walmart Inc (NYSE: WMT)?

As earnings season starts to heat up, here is a summary of how some of the top retail analysts and experts answered these pressing questions and more.

Walmart Is The Barometer

Walmart is a "great barometer" to gauge the state of the consumer, Oppenheimer analyst Brian Nagel said Friday on CNBC's "Squawk Box" segment. The company showed a 2.8% comp growth in its Thursday earnings report. Management's move to lift its full year outlook despite potential new tariffs is also a "testament to the strength of their business."

However, it may be a mistake to look at a mall-based retailer as a barometer of consumer strength, he said. Companies with strong e-commerce exposure are gaining at the expense of others who are merely being "left behind."

"I don't know how indicative those are when we think about the overall health of the consumer," Nagel said.

Related Link: Momentum And Discipline: The Street Weighs In On Walmart

Consumers Paying Attention To 'Sirens'

Consumer confidence isn't as strong today as it has been as shoppers are "paying attention to all the sirens," especially recession concerns, Jharonne Martis, director of consumer research at Refinitiv, said during the CNBC segment. Consumers are more worried today about their job security and "increasingly aware" a prolonged trade war would result in prices of goods moving higher.

The corporate community is also flashing concerning signals, she said. To date, retailers combined for 19 negative pre-announcements compared to just seven positive outlooks.

Mixed Bag So Far

The consumer is "very strong" at a time when unemployment is at its lowest levels in 50 years and employment is at a record high, Jan Kniffen, J. Rogers Kniffen CEO and CNBC Contributor said on "Worldwide Exchange" Friday morning. Non-supervisory wages are also rising more than 3% a year.

Further evidence of a strong consumer is the fact that Walmart along with rivals Target Corporation (NYSE: TGT) and Amazon.com, Inc. (NASDAQ: AMZN) are all performing well at the same time, he said. The other takeaway from the strength of department store is others are losing a "heck of a lot" of market share.

"There is nothing going wrong with the consumer," he said. "There is plenty going wrong with mall-based retail. The problem with that is people aren't going to the mall."

In Macy's case, the company has too many stores but management has a game plan which includes addition of off-price shopping to more stores and leasing space to other sellers, he said. As such, the company will likely be the "last man standing" in the mall as declining foot traffic trends are unlikely to end.

"They are doing all the right things and yet it is not enough for the marketplace," Kniffen said.

Posted-In: Brian Nagel CNBC Jan KniffenAnalyst Color Earnings Retail Sales Analyst Ratings Media Best of Benzinga

 

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