Walmart, Target, Home Depot and Lowe’s

Investment Analysis Clubs Macro Economic Trends and Risks
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Walmart, Target, Home Depot and Lowe’s reported quarterly results this week, and they each offered a different perspective on where and how people are spending their money.

“While we’ve experienced high levels of inflation in our international markets over the years, U.S. inflation being this high and moving so quickly, both in food and general merchandise, is unusual,” Walmart’s CEO said.

Analysts and investors didn’t anticipate that Walmart and Target would take such a massive hit to their profits.

Home Depot and Lowe’s, though, have seen more strength among shoppers in recent weeks.

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https://www.cnbc.com/2022/05/18/what-walmart-target-home-dep…

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Analysts and investors didn’t anticipate that Walmart and Target would take such a massive hit to their profits.

“Massive”? A 12% miss is “massive”? Boeing’s Q2 last year missed by a -185%. Their Q3 missed by -1,871%. Their Q4 missed by -2,191%. 12% is “massive”? Only in Shinyland, where everything is SHOCKING!!!, ALARMING!!!

Steve

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I think we know that inflation stresses the retail business. Rising costs means that consumers must make choices. Especially those who live paycheck to paycheck. Initially they may spend their savings, but soon they must adjust.

Meanwhile retailers are experiencing rising costs from labor, transportation, and what they pay suppliers. Some can successfully pass those on to customers. But we have already seen items from restaurants who think raising prices to match cost increases will drive them out of the market. They are exploring ways to manage. A Dairy Queen the other day had closed its dining room. Only drive up available. That probably allowed reducing staff.

Some also streamline the menu to require less staff in the kitchen. Trimming portion sizes. Reducing quality to hold down costs. More starches, less protein.

Some are better at it than others. Investors want to know who call pull off the transition successfully. Surprises can expect harsh sell offs these days.

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A Dairy Queen the other day had closed its dining room. Only drive up available. That probably allowed reducing staff.

The Wendy’s I have commented on from time to time over the past year: dining room closed, drive-up only, only open until 3pm, until a couple months ago, when the store closed entirely, due to “staffing issues”. Looked on the Wendy’s corporate site store locator last week: that store has been deleted from the store list. Looked on Google Maps, which flags that store as “closed temporarily”.

At a Wendy’s/Tim’s combo, the Wendy’s dining room is almost always closed, drive-up only, while the dining room on the Tim’s side has been open for months. But the pop machine on the Tim’s side has been broken for two weeks. I had the snow tires taken off my car and the summer tires, on expen$ive alloy wheels, put on. Both of the drive-ups at the combo, Wendy’s and Tim’s, are narrow, with sharp turns, and big curbs, so I’ll not use the drive-up with the expen$ive wheels on the car, as I will not risk them getting damaged on the curbs.

Tried another Tim’s: dining room closed, drive-up only.

Tried another Wendy’s: dining room closed, drive-up only, though it appears to be in the process of a remodel, so that could be why the dining room was closed.

The two Arby’s near home? Well staffed, dining room open until 7pm.

The local “news” had another restaurant owner whining for the camera today: only has 6 servers, vs the usual 14, can’t get Styrofoam take-out food containers from his usual in-state supplier. Has to buy them off Amazon at four times the cost.

Steve

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The two Arby’s near home? Well staffed, dining room open until 7pm.

Just stay away from milk shakes.
https://nypost.com/2022/05/15/arbys-manager-stephen-sharp-ca…
Arby’s manager caught urinating in milkshake mix

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“Massive”? A 12% miss is “massive”?

All depends on proper context. Don’t know how often any of the retailers miss or by how much, but doubt it is frequently in the double digits.

Just like hearing a baseball player pops out to the pitcher. Sounds ho-hum. But in proper context, this one is amazing.

https://www.msn.com/en-us/sports/mlb/mlb-fans-react-to-joey-…

Then throw on top that 3 years ago he popped out to the 1st baseman for the first time in his career.

JLC

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Tried another Wendy’s: dining room closed, drive-up only

In my area, many dining rooms were closed due to Covid. Drive up, take out, or home delivery kept some in business.

Covid seems to be less of a concern for now, but now its the manpower shortage.

With lots of young adults coming home for the summer, perhaps the shortage at least in fast food will be temporary.

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With lots of young adults coming home for the summer, perhaps the shortage at least in fast food will be temporary.

I saw two things today that, put together, I find somewhat concerning.

  1. A fast food place advertising that they are hiring, at “up to” $16/hr.

  2. A pharmacy advertising that they are hiring pharmacy techs, “starting at” $16/hr.

IMHO pharmacy techs should be getting paid more than any non-management fast-food workers.

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IMHO pharmacy techs should be getting paid more than any non-management fast-food workers.

The break point is $16. “Up to” means most of the burger flippers will work for less. That wage is for something weird, like starting at zero-dark-thirty, or working until zero-dark-thirty, not anything like 8am to 6pm.

The pharmacy techs will get $16 for weekdays 8-5. more for earlier/later/weekends/holidays.

Steve

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IMHO pharmacy techs should be getting paid more than any non-management fast-food workers.

Pharm techs probably have benefits or at least better benefits and definitely better hours.

JLC