Alibaba, Walmart and Target to Show Retailers Perspectives on Pandemic
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American retail companies USA They will be eager to see the report from Alibaba Group Holding Ltd. next Friday when the Chinese e-commerce giant shows what it was like to operate at the core of the COVID-19 pandemic and emerge on the other side.
Commercial blockages imposed to combat the spread of the coronavirus are tricky for e-commerce players because limitations on in-person activity can help entice people to shop online, but they also create economic uncertainty that makes pressure on discretionary spending.
Chinese government data showed slower overall growth for online purchases of physical goods in January and February, but April growth figures returned to levels close to pre-virus in what an analyst said it was a positive signal for Alibaba.
VASE
Many US retailers in the United States are also planning to report their income in the coming week, although they are still bearing the brunt of the pandemic. And unlike Alibaba, which does almost all of its business online, retailers like Walmart Inc.
WMT
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and Target Corp.
TGT
have physical stores to worry about.
American retail companies USA They probably have a limited idea of what the rest of the year will be for their businesses, given questions about the trajectory of the COVID-19 epidemic and what governments will respond. Investors can expect little future financial commentary, in line with a broader trend across all sectors.
About half of the S&P 500 Index
SPX
Companies that made financial announcements before May 12 have withdrawn their profit forecasts, according to a recent Gartner analysis, and a fifth more have revised their outlook. Only 11% maintained their previous forecasts.
Analysts are currently modeling a 42% drop in second quarter profits compared to their forecast of an 11% drop in late March. They also expect a 20.5% drop for the entire calendar year, while only anticipating a 1.1% contraction as of March 31.
Most companies have declined to offer forecasts for the second quarter, according to Gartner, and the overall business-driven dynamic highlights the "depth of uncertainty facing business leaders". business today, "said Gartner chief financial officer Steve Adams in a statement.
Of the companies that completely withdrew their forecasts, 20% belonged to the industrial sector, which "includes airlines, construction companies and manufacturing companies, all of which have trouble forecasting consumer demand in 2020," said Adams. Industrial enterprises accounted for the largest share of the canceled outlook, followed by the consumer discretionary and the IT and financial sectors.
We will learn more about the tech industry in the coming week with several big names, including Nvidia Corp.
NVDA
, Expedia Group Inc.
EXPE
and Take-Two Interactive Software Inc.
TTWO,
In the retail sector, Alibaba and Walmart will join Best Buy Co. Inc.
ABY
, Home Depot Inc.
High Definition
and others.
Here are the things to watch out for as 24 members of the S&P 500 and two components of the Dow Jones Industrial Average.
An avalanche of retail sales
Next week, you will find out how American retailers have handled store closings and managed their changes in e-commerce. Walmart, Home Depot and Kohl’s Corp.
KSS
Start your reports Tuesday morning, followed by Lowe’s Companies Inc.
LOW,
and Target Wednesday morning and L Brands Inc.
KG
Wednesday afternoon. Best Buy reads spending on personal technology on Thursday morning.
Walmart recently "accelerated the development" of a new two-hour delivery offering that will cost $ 10 in addition to the existing delivery charges. The company started a pilot service in 100 stores in April and plans to expand it to 1,000 in early May. Morgan Stanley analyst Simeon Gutman will examine whether the service is helping Walmart attract more middle and high income customers.
The L Brands report is expected to show "the increasingly sharp range between the performance of Bath & Body Works and Victoria & # 39; s Secret" given "the increased demand for soap," wrote the analyst. Deutsche Bank Tiffany Kanaga. The company will also discuss its new strategic vision now that the agreement for Sycamore Partners to buy Victoria's Secret is under negotiation, and L Brands now anticipates that Victoria's Secret will operate as an independent company.
Alibaba is in an interesting position, as it generally offers financial prospects once a year with its March quarter report, which marks the end of the business year. Friday morning's results "are not very large to a large extent, with much more emphasis on the pace of recovery this quarter by investors," wrote Rob Sanderson of Loop Capital.
"We would expect an unusually wide range in the focus of exercise 21 and we would not be surprised if management postponed the offer of a vision for the whole year "wrote Sanderson.
Chinese Internet Partners Appoint Baidu Inc.
BIDU
and iQiyi Inc.
IQ
report after the market closed on Monday.
Contractor
Nvidia will report a few weeks after Advanced Micro Devices Inc. noted "good activity" around the cloud and spending in large companies. CEO Jensen Huang outlined his company's plans for next-generation data center offerings this week, saying the products are already manufactured and shipped, which should lead to interesting discussions about the pace of delivery and deployment. . .
"Overall, as we look at how consumer discretionary / gaming activities stay around COVID in the short term, we believe the data center, with current market trends and new product offerings, can continue to grow. Be a relative source of support, "wrote Stacy Rasgon of Bernstein.
Commercial technology companies of Palo Alto Networks Inc.
PANW,
Splunk Inc.
SPLK
and Hewlett-Packard Enterprise Co.
HPE,
join Nvidia Thursday afternoon.
Stay punished
Expedia Group Inc.
EXPE
Get on stage Wednesday afternoon to discuss trends in the travel industry as JMP Securities analyst Andrew Boone expects April to slow demand.
"Although Expedia has announced preliminary results that were mostly worse than we expected, we are focusing more on the organizational changes in the business which we hope will will lead to better competition for reservations as travel begins to recover, "he wrote. .