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Hey listeners, it's Friday, March 20th. I'm Alex O'Sola for the Wall Street Journal.
0:38
And this is what's news and earnings. Our look at some of the biggest themes
0:41
standing out this earnings season. The holiday quarter is the most important time of year
0:46
for U.S. retailers. And despite worries about inflation and the job market,
0:50
consumer spending largely held up. We'll look at a range of retailers to see patterns in how
0:55
Americans are spending from Walmart to Discounters to Macy's. One of the last traditional
1:00
department stores which just reported surprisingly strong results. Some companies are navigating
1:06
changes in consumer shopping habits better than others. But many of them face the same uncertainties.
1:12
There's government policy on tariffs that keeps changing which affects their costs.
1:15
And the Iran War is threatening to send inflation even higher.
1:25
Joining me to break down what all this means for the retail industry is WSJ reporter
1:29
Kelly Clunin. Welcome, Kelly. Thanks for having me.
1:32
Kelly, Walmart posted strong sales growth in its most recent quarter. But it also lost its
1:37
crown as the country's largest company by revenue to Amazon. How are Walmart and other retailers
1:42
trying to keep up in the e-commerce space? Yeah, totally. For quite a while now, Amazon has been
1:48
winning business from other retailers with its quick shipping options. This week it even said that
1:52
it's rolling out one hour and three hour delivery services across the U.S.
1:56
Such compete. I think a lot of retailers are really just looking to up their own delivery times.
2:01
Target, which has been struggling with sluggish sales for several years now,
2:05
said earlier this month that it plans to launch next day delivery in more than 20 new
2:09
mature areas. And then Walmart has also been expanding its own same day delivery service in
2:14
recent years. Right. Walmart CEO John Furner mentioned the growth of its fast delivery option
2:20
in Walmart's latest earnings call. The investments we've made in technology and supply chain
2:24
help us deliver items even faster. They're paying off. Here in the U.S., customers using fast
2:29
delivery, and that's delivery in under three hours, grew more than 60% for the year.
2:34
You just heard Walmart talk a little bit about the investments that they've made in technology
2:38
and in automation. And it's also said that those efforts have helped to cut down on labor costs.
2:43
And Walmart also has been working on its own AI shopping assistant called Sparky,
2:47
which it said has helped boost average order values. Shifting a little bit gas prices have been
2:53
soaring because of the war in the Middle East. But even before that, people were pretty worried
2:57
about inflation. What do the stores have to say? Yeah, inflation has definitely been a major theme
3:02
across industry for a while now. And even as consumers seem to remain resilient and
3:08
continue spending, their wallets had definitely come under pressure as inflation just remains
3:12
stubbornly high. Some retailers have noted though that inflation for some products has come down
3:17
recently, which has helped lower prices a bit. Costco, for example, said it has already lowered
3:23
the cost of some products like eggs, cheese, coffee, because of lower inflation for those things.
3:29
It's also said that if it gets tear of refunds after the Supreme Court struck down Trump's
3:33
tariffs last month, that it would then pass on those lower prices to shoppers. I think Costco's
3:38
a really interesting case because it also, you know, got sued by a customer who won refunds on
3:43
on items because of the tariffs. The lawsuit basically wants to force Costco to pass along any
3:48
refunds it might get from the government to customers. But it really is still a huge question
3:52
mark of when or if any of these companies will get refunds from the government and how that would
3:58
flow through in the form of lower prices or refunds to customers. So Kelly, we know
4:03
people are worried about prices. They have been for a while. What kinds of retailers are benefiting
4:08
from that? Yeah, a lot of stores have been talking about this kind of case shaped economy where
4:13
lower-income consumers are having a harder time. They're sort of trading down or remain on the
4:19
hunt for value while hiring some shoppers generally seem to be doing pretty well and they continue
4:24
to spend. That dynamic needs a couple of things. For one, off-price retailers like TJX, which owns
4:30
TJ Maxx and Marshalls, raw stores, and Burlington all had pretty solid quarters as people
4:36
looked for value. Raw said that it's customer-based, has grown, adding new shoppers from a range
4:41
of income levels in the ages. And it's CEO even said that off-price retailers in general are
4:46
gaining market share for more mainstream retailers, including department stores.
4:50
But at the same time, other retailers have really put into strength from higher-income consumers,
4:55
including Macy's, which reported earnings earlier this week. Macy said its customers tend to have
5:00
higher incomes and, you know, generally have been more resilient than lower-income shoppers,
5:05
which helped boost sales at its Bloomingdale's brand, which, you know, tends to have more
5:08
luxury products. That was Wall Street Journal reporter Kelly Kloonin. Kelly, thanks so much for
5:13
joining us. Thanks for having me. And that was What's News in Earnings. Today's show is produced
5:18
by Pierre Bienname, with supervising producer Tally Arbel, additional sound courtesy of S&P Global
5:24
Market Intelligence. Later today, we'll have the PM edition of What's News out for you as usual,
5:28
and we'll be back with you next earnings season, looking at more reports from major U.S. companies.
5:32
Until then, I'm Alex Osula. Have a great day!
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