Macy’s, Dollar Tree, Costco: What to watch in retail earnings

Yahoo Finance’s Alexandra Semenova joins the Live show to discuss what to expect from earnings being reported this week by retailers including Macy’s, Dollar Tree, and Costco.

Video transcript

JARED BLIKRE: Well, last week was a disaster for retail stocks after Walmart and Target both gave grim forecasts for the year ahead, tanking both of their shares, the worst day since 1987. This week, we have more retailers reporting, including Macy's, Dollar Tree, Nordstrom, and Costco. Yahoo Finance's Alexandra Semenova joins us with a look ahead for the week. What's going on?

ALEXANDRA SEMENOVA: That's right, guys. Retail in focus again this week after a dismal week for the sector. We've got more reports due out for Macy's, Costco, Best Buy, and some other retailers. And Wall Street is bracing for further disappointment, of course, after jarring results from Walmart and Target last week, showing signs that inflation is starting to meaningfully hit companies' bottom lines. A big miss from the retail giants last week when they slashed their forecasts and said that bloated inventories and higher fuel costs were starting to weigh on profits.

Walmart and Target, as you said, Jared, posting their worst day since 1987, and of course, spurring the broader sell-off that we saw in stocks. That excess inventory was also quite notable. Wall Street had anticipated some pressure from rising fuel costs. But the discounting on items came as a big shock. And just a couple of months before that, Target and Walmart had said that they had an upbeat outlook for 2022. So a lot of disappointment there, and analysts will be looking for similar trends in this week's results.

JULIE HYMAN: And when we talk about trends overall in the results, obviously, we know inflation's been going up. This is something we've been talking about, everybody's been talking about for a while. So talk to us about why it was such a shock, the way that things kind of played out in these reports.

ALEXANDRA SEMENOVA: Well, up until last week, analysts had been anticipating that inflation could be a bit of a tailwind, actually, for corporate America because of that pricing power they have, transitioning some of their costs over to consumers. But last week, we saw that that wasn't the case, that those higher costs are really hitting their bottom line. So big shock there on Wall Street.

JARED BLIKRE: All right, I got one quick follow-up. How many articles about retailers is Brian Sozzi going to write this week? Because he is a monster. He is on fire over there at Davos. I'm just wondering, anything else on your radar for this week? I'll give you the floor.

ALEXANDRA SEMENOVA: Well, we'll also have a lot of economic data out. We're going to get another read on the GDP, after we saw contraction last week-- last quarter for the first time in quite a while. And we'll get more data on personal expenditures. So that will also show the impact of inflation on consumers.

JULIE HYMAN: Oh, and look at that on Friday. Yeah, it's the core PCE, which is the Fed's favorite measure of inflation.

JARED BLIKRE: It's my favorite, too.

JULIE HYMAN: Of course. Even the Fed.