When Walmart (NYSE:WMT) reports quarterly earnings Thursday, investors will scour sales numbers and executives’ comments for clues about whether rising prices are making shoppers skittish.
The retail giant is closely watched as a bellwether of inflation.
"Any sort of wavering in behavior, they’re going to detect it," said Steph Wissink, a retail analyst for Jefferies. "The voice of Walmart carries more weight in the context of ‘How healthy is the consumer?'"
Inflation has risen rapidly, raising questions about what that means for Americans’ spending habits after a pandemic- and stimulus-fueled spending spree.
The consumer price index rose by 7% in December compared with a year earlier, according to the U.S. Bureau of Labor Statistics, and marked the fastest increase in nearly 40 years. Food prices have increased 6.3% on a 12-month basis and are closely watched because groceries are households’ most frequent purchases.
Wissink, however, said the backdrop is changing: Consumers spent freely during the holiday season, though challenged by out-of-stocks, shipping delays and other supply-chain snarls. Walmart’s report, which will capture its earnings in the three months ended Jan. 31, will include the holiday season. But investors will be most eager to hear about trends over the last few weeks.
Wissink said consumers may be starting to think twice before opening their wallets as prices creep higher week after week, and they no longer receive stimulus checks from the government.
WMT shares picked up 14 cents to $134.51.
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