Summary
- Only about 40 companies report, but it will be a who’s who list of companies.
- In the retail sector, companies as varied as Macy’s (M), Dollar General (DG) and Victoria’s Secret (VSCO) will provide widely differing perspectives on what consumers want and need.
- Salesforce (CRM) and Snowflake (SNOW) should confirm that corporate demand for tech goods and services remains strong.
- Meanwhile Zoom (ZM)and Peloton (PTON) need to convince investors that they are adapting to a post-Covid world.
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Summary
- Only about 40 companies report, but it will be a who’s who list of companies.
- In the retail sector, companies as varied as Macy’s (M), Dollar General (DG) and Victoria’s Secret (VSCO) will provide widely differing perspectives on what consumers want and need.
- Salesforce (CRM) and Snowflake (SNOW) should confirm that corporate demand for tech goods and services remains strong.
- Meanwhile Zoom (ZM)and Peloton (PTON) need to convince investors that they are adapting to a post-Covid world.
What We Learned Last Week
- The latest batch of earnings from tech companies are mostly strong, with robust outlooks. These include among others Cisco Systems (CSCO), and Synopsys Inc (SNPS). That is in sharp contrast to outlooks from Intel (INTC), Micron Technologies (MU) and Nvidia Corp (NVDA).
- The primary difference? The first group of companies serves other companies. The second group makes products for consumer technology. If/when these kinds of tech companies start reporting weaker earnings or order books we will likely be tipping into recession if we aren’t already there.
- Retailers in the luxury goods bracket are mostly producing good earnings, but disappointing sales and earnings outlooks.
- As we’ve noted before, travel-oriented consumer discretionary companies are mostly doing well, with solid 2H outlooks. There is reason to be skeptical about that as long as the Fed is pushing up rates but that may be a developing 3Q story.
- Some 95% of companies have now reported 2Q earnings; only about 40 will be in the market this coming week. Many are retailers; with a smattering of high profile tech companies.
Monday
- Zoom Video Co (ZM), a market, corporate, and consumer favourite early on in the pandemic, reports on how usage is faring as most of the world gets back to normal and whether it is managing to monetise its platform.
Tuesday
- Advance Auto Parts (AAP) outlook may reveal whether it expects people to respond to inflation by taking on more DIY car projects.
- Macy’s (M), Nordstrom (JWN), and Dick’s Sporting Goods (DKS) provide another window on how various retailers are managing inventories.
- Homebuilder Toll Brothers (TOL) may shed light on how sensitive high-end home buyers are, to high mortgage rates.
Wednesday
- Nvidia (NVDA)started the selloff in consumer-oriented tech with its warning about soft demand; today we learn whether it manages to overdeliver.
- SalesForce (CRM) and Snowflake (SNOW) should report strong results as they are software companies mostly exposed to the corporate sector.
- Specialty retailers have offered soft outlooks in this earnings season, and Williams-Sonoma (WSM) will probably be no exception.
Thursday
- With a miniscule market cap of $4bn (down from $47 bn in early 2021) Peloton (PTON) hardly matters anymore. But its earnings will be closely scrutinized for color on how people are adapting to the post-Covid world.
- Dollar Tree (DLTR) and Dollar General (DG) may be thriving as lower income consumers seek out low-cost goods.
- Victoria’s Secret (VSCO), Burlington Stores (BURL), The Gap (GPS) will offer three additional (but quite different) perspectives on consumers’ changings tastes and needs.
- Dell Technology (DELL) and VMware Inc. (VMW) should highlight again the contrast between consumer- and corporate-oriented tech.