Retail Earnings Lag S&P 500—Tariffs and Thin Margins Cloud the Outlook

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Retail Earnings Lag S&P 500—Tariffs and Thin Margins Cloud the

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Interesting contrast between the major retailers raising prices, including Walmart (NYSE:) and Target (NYSE:), and those who aren’t (Home Depot (NYSE:) & Lowe’s (NYSE:)). The details provide better context.

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4.3%, even before the tariffs.

$19 billion in profits for WMT in FY2025 sounds like a lot, but not against $681 billion in sales. They spent $512 billion (75% of total sales) just on cost of revenue alone (AKA buying products from wholesalers).

It’s not an apples to apples comparison.

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2%), but below the market average (+6.8). Meanwhile EPS growth was negative for all but WMT.

Only Home Depot reported sales above expectations (+1.4%), and above the market average (+9.0%). Meanwhile they all have EPS growth expectations for the next 4 quarters that is below the market average.

Q1 results for all combined (with 92% having reported results now) has been impressive:

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How much of this is pull forward from the tariffs is uncertain. The forward EPS estimates have already fallen from $279 to $270 since the Liberation Day. With prices rising, this has pushed the forward PE to 22.1x, against the backdrop of 4.5% interest rates.

Still a tough sell for me no matter which way you look at it.

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#Retail #Earnings #Lag #500Tariffs #Thin #Margins #Cloud #

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