A big week for retail earnings is coming. Here's what traffic data tells us.

  • By Teresa Rivas,
  • Barron's
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This coming week will be a busy one for retail earnings, and according to foot traffic data, investors may be in for good news if strong October trends hold through the end of the year.

Walmart (WMT) and Home Depot (HD) are the first out of the gate with fiscal-third quarter earnings reports on Tuesday. Both stocks are up about 26% in 2020, helped by the Covid-19 crisis. Walmart has benefited from its position as an essential retailer and rolled out a subscription-based service to facilitate its growing online grocery business, while consumers’ increasing home purchases, and willingness to spend more on DIY projects and furnishings is a boon for Home Depot.

Customer traffic shows that those trends were strengthening in October, especially as Covid cases have begun ticking up with colder weather.

According to data from Placer.ai, shoppers were returning to Walmart in higher numbers and spending more money last month: The time customers spent at Walmart climbed 14% in October, and visits were down just 7.6% year over year, its best showing since May. Traffic at its Sam’s Club division was up 7.5% from 2019 levels.

At Home Depot, visits have been up nearly 11% year over year every month since April; September had the smallest gains, but traffic picked up again in October, rising 15%.

Smaller rivals Target (TGT) and Lowe’s (LOW), up 27% and 33% year to date, respectively, will report Wednesday. They actually had the better earnings reports in the second quarter, and Placer.ai’s data shows they could outperform again.

Consumers are spending more time at Target stores, just as they are at Walmart, and visits rose 4.1% from 2019 levels in October. Meanwhile Lowe’s traffic has been better than 2019 levels every month this year, outpacing Home Depot’s gains each month and rising nearly 24% in October.

Elsewhere, BJ’s Wholesale (BJ) and Macy’s (M) will report results on Thursday. It’s hard to think of two companies whose fortunes have diverged more during the pandemic. Macy’s, like other department stores, has lost more than 50% as Covid exacerbated a years-long trend of market share loss amid falling mall traffic. BJ’s is up nearly 80% in 2020, as consumers have flocked to discounters throughout the crisis.

Yet traffic data is positive for both. Placer.ai says that October was Macy’s best month for visits in months, down just 36.2% from 2019 levels, an improvement from mid-40% declines. October was BJ’s ninth consecutive month of year-over-year visit growth, and with visits up 18%, it was the company’s best month since July.

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