With retail earnings on tap, investors expect a tale of two worlds

With retail earnings on tap, investors expect a tale of two worlds.

  • By Lauren Pollock and James Benedict,
  • The Wall Street Journal
  • Economic Insight
  • Markets
  • Reporting and Disclosures
  • Economic Insight
  • Markets
  • Reporting and Disclosures
  • Economic Insight
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Retailers’ fortunes have diverged in the wake of the financial crisis. Walmart (WMT) and Home Depot (HD) have found ways to compete in an increasingly online world, while Macy’s (M) is still in the midst of a turnaround and J.C. Penney (JCP) is fighting to stay alive.

Investors will be seeking clues about the all-important holiday shopping season when the companies report results this week.

Walmart is seen posting a slight bump in quarterly sales and earnings on Thursday. The big-box retailer, which gets more than half its U.S. revenue from groceries and staples, has drawn more shoppers to its supercenters as it remodels stores and cuts prices. The company last month lowered its earnings targets for 2019 after buying Indian e-commerce company Flipkart.

Home Depot’s shares haven’t kept pace with the S&P 500 (.SPX) this year. The home-improvement retailer is projected to post higher earnings and sales on Tuesday. But concerns about a cooling housing market, partly tied to rising interest rates, have kept some investors on the sidelines. Tariffs on Canadian lumber and Korean washing machines also have led to higher costs.

Macy’s is expected to report another quarter of higher sales on Wednesday. The retailer, whose shares have surged nearly 50% this year, has been investing in its stores and upgrading its online operations. Some critics, though, have argued the company isn’t moving fast enough in its turnaround efforts as department stores continue losing market share to off-price chains.

J.C. Penney is one of few retailers not to benefit from a stronger consumer economy. The department-store retailer is expected to post a wider loss and a drop in sales on Thursday, continuing a long slump. Penney has closed stores, cut jobs and reduced inventory, but its shares now trade below $2, down from a high above $80 in 2007. New CEO Jill Soltau, formerly of Joann Stores, has been tasked with turning about the troubled company.

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