Retail Snapshot – Can This Week Make a Difference?

This week's earnings reports will give us some more info and data to digest last week's market drop. But without some major players' announcements, it seems improbable that this week will shift the market back up. Nevertheless, this week's reports will help the investors feel the market and think about their next moves. So, what are we looking for this week?

Well, retailers will be focused upon, as we expect earnings reports from Kohl's Corporation KSS and Nordstrom, Inc. JWN on Tuesday, Ross Stores, Inc. ROST and Burlington Stores, Inc. BURL on Wednesday, hoping to positively surprise their investors as TJX Companies TJX did last week, followed by Costco Wholesale Corporation COST, American Eagle Outfitters, Inc. AEO and AutoZone, Inc. AZO.

Why Is Retail Stock Important?

Whether you prefer retail stocks or not, earnings reports will be followed by estimates for the next period, and that is something worth paying attention to. That info might give us more understanding of reactions of U.S. consumers in the coming quarters, which will be useful for investment decisions in most of the economy segments, and hopefully give us a signal when and where to expect the next plunge.

What To Expect From US Retail Companies?

Target Corporation TGT has been investing in its omni channel capabilities. It already started getting some benefits in 2019 from that investment, so earnings guidance was increased for Q2 and Q3 2019, and the company expects further positive effects in 2020, excluding the coronavirus impact. Although Target already announced just 1.4% sales growth, while the investors expected more, we will have more details once the earnings report comes out this week. Target is probably the largest U.S. retailer to announce the earnings results after coronavirus started impacting the stock market stronger.

The Kroger Co.'s KR Q4 earnings will most likely not suffer from coronavirus outbreak. However, this grocery giant's stock has been quite volatile in previous years, probably due to increased competition and slower growth. Most recently, Kroger stock has been recovering nicely, currently valued below $30, compared to a 5-year maximum in 2015, when the share price was above $41.

Meanwhile, the Coronavirus outbreak, erupting in China, probably the largest suppliers base for the world biggest retailers, might not hit those companies which depend more on the other markets as hard as the others. For example, The Home Depot, Inc. HD, a home improvement giant, might deal with coronavirus better than the other retailers, since 70% of its inventory is procured domestically. So, by no means is all black when it comes to retail during this period of severe headwind COVID-19.

Conclusion

Although this week we do not expect announcements big enough to repeat the last week's dramatic movements, if you are an investor, it will be better to wait for the earnings results and then make your investment strategy for the upcoming period as there can hardly be a surprise that positive to make a difference.

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