Retail Earnings: What earnings are saying about the state of the consumer

Yahoo Finance Live previews the week in retail earnings ahead of reporting from retail giants such as BJ's, Dollar Tree, and Costco.

Video transcript

BRAD SMITH: Let's talk a little bit more about retail this morning. The retail earnings roundup continues this week following last week's mixed picture with Costco, Lowe's, and Best Buy all on tap for this week. So what should investors expect? Yahoo Finance's Josh Shafer joins us now. Josh, what are we watching for?

JOSH SCHAFER: Yeah, Brad, so I want to start by just going over what we saw last week and what we can learn from that and maybe sort of look for going into this week. And I think the biggest story out of last week was are not seeing a slowdown yet. People are talking about a slowdown, but when you look at those same-store sales numbers from some of the big companies that reported last week, these are not down from last year.

You see Target up nearly 1% when you're talking about brick-and-mortar stores. Walmart was up over 7%. TJX up about 3%. So we had talked a lot even last week in anticipation of these earnings, basically saying, is the slowdown already happening? It is not already happening. So we're curious about what we hear moving forward and specifically when we think about what we heard from Walmart what we hear from a trade-down perspective.

I think that's going to be some of the interesting companies to watch this week when you think about a BJ's is reporting, Dollar Tree, Costco. Are they saying that they think higher-income consumers are trading down because that is something that we heard from Walmart last week?

- Yeah, definitely. And also, the companies that are more weighted towards grocery seem to be better. The ones that are more discretionary-based are not doing as well. Foot Locker is really a prime example. Got killed on Friday, and then there's some analysts chatter continuing this morning that's not very positive.

JOSH SCHAFER: And you're curious, what does that mean for Dick's Sporting Goods. How different is the business? And I think the business, from at least what analysts expect going into Dick's report is it is a very different business. When you think about what Dick's has already been able to build out from a private brand perspective when you think about what Dick's has been able to do as far as getting rid of inventory being in a wholesale spot.

I think Foot Locker is an interesting company to think about when we talk about a consumer slowdown because Foot Locker is trying to rebrand right now. They were already in the process of trying to change what they're doing. You do that, well, you already have uncertainty in the overall economy.

It's going to be tough to try and rebuild same-store sales growth when you're not even sure if people that have been coming into stores are going to be coming into stores. And I think that's what puts Foot Locker in kind of a unique struggling position here.

- Yeah, well, we'll see how the stock continues to doing Dick's to your point. A lot of suspense there. Going to be interesting. Thanks, Josh. Appreciate it.