Background on Walmart and Target
Walmart and Target are two of the largest retail giants in the United States, constantly competing for market share and customer loyalty. Walmart, led by CEO Doug McMillon, is known for its vast product selection and low prices. Target, under CEO Brian Cornell, focuses on unique brands and in-store experiences. Both companies have been navigating the challenges posed by rising tariffs and inflation.
RBC Capital Markets’ Forecasts
According to RBC Capital Markets, Walmart is expected to report better-than-expected Q2 fiscal results, while Target’s earnings are likely to fall short of expectations. This analysis is crucial for investors and retail enthusiasts, as it sheds light on the performance of these major players in the retail sector.
Walmart’s Projected Q2 Results
RBC Capital Markets projects Walmart’s adjusted Q2 earnings at $0.80 per share, surpassing the consensus estimate of $0.73. Moreover, the firm anticipates a 4.9% constant currency growth in net sales, which is above the consensus estimate of 4.8%. Walmart is scheduled to release its Q2 results on August 21.
Steven Shemesh, an analyst at RBC, stated in a note to clients on Monday: “Walmart’s transaction data—our proprietary weighted scan data analysis—suggests a modest increase in revenues.”
In May, Walmart reported unexpected annual growth in its Q1 earnings and maintained its full-year outlook, although CEO Doug McMillon warned of necessary price increases due to tariff impacts.
Potential Impact on Walmart’s Full-Year Forecast
Should Walmart meet RBC’s Q2 forecast, it would provide the company with the confidence needed to raise its full-year net sales growth projection from between 3% and 4% to a new range of 3.5% to 4.5%. However, RBC notes that accounting treatment might pose a challenge for Walmart in the second half of the year if adjustments are required.
Target’s Projected Q2 Results
RBC now forecasts Target’s adjusted Q2 earnings at $1.91 per share, up from its previous estimate of $1.89 but below Wall Street’s expectation of $2.01. Target is projected to experience a 2.6% decline in comparable sales, compared to RBC’s previous prediction of a 3.6% decline and Wall Street’s model of a 3.3% drop.
Target is set to publish its Q2 results on August 20.
Key Questions and Answers
- Q: How are Walmart and Target expected to perform in Q2? A: RBC Capital Markets projects Walmart to exceed Q2 expectations with adjusted earnings of $0.80 per share and a 4.9% constant currency growth in net sales. Target, however, is expected to fall short of expectations with adjusted earnings of $1.91 per share and a 2.6% decline in comparable sales.
- Q: What impact will tariffs have on both companies? A: Both Walmart and Target are facing challenges due to rising tariffs, which have led to increased costs. Walmart has already signaled price increases to offset these impacts, while Target continues to navigate this difficult environment.
- Q: How might Walmart’s full-year forecast change based on Q2 results? A: Should Walmart meet or exceed RBC’s Q2 forecast, the company may raise its full-year net sales growth projection from 3% to 4% to a new range of 3.5% to 4.5%. However, accounting treatment in the second half of the year could pose a challenge.
