WMT, WRBY, SE, ZIM, KSS: Earnings Preview

By Kirsteen Mackay

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Company earnings due this week include Walmart (WMT), Warby Parker (WRBY), Sea Ltd (SE), ZIM Integrated Shipping (ZIM), and Kohl’s (KSS). 

This week, several retail earnings reports are in the calendar, including Target, Walmart, and Kohls. These stores are battling several headwinds, including weather, geopolitical uncertainty, rising energy prices, rising interest rates, labor shortages, inflation and recession concerns.

Here's an overview of five of the most anticipated earnings calls this week:

Walmart Inc (NYSE: WMT)

Analysts appear bullish on Walmart Inc (NYSE: WMT) as it prepares to release fiscal quarter earnings on 17 May. FactSet estimates show EPS at $1.48 and sales at $138bn. 

Walmart has been upping its game in recruiting and retaining staff to combat labor shortages. It recently raised trucker pay to as much as $110k per year. While this weekend, it announced a new “College2Career program” to fast-track graduates to management roles typically paying over $210k a year. The program will provide classroom training, hands-on experience and mentoring for recent and soon-to-be graduates.

The company is a dividend favorite with a yield of 1.5%.

Warby Parker (NYSE: WRBY)

Eyewear retailer Warby Parker (NYSE: WRBY) has seen its share price decimated, falling over 67% since IPO. The $2bn company released its Q1 earnings before the market open today, and it has a busy quarter to report.

Co-Founder and Co-CEO Dave Gilboa commented:

We opened eight new retail stores, expanded our eye exam capacity, launched four new eyewear collections, scaled our vertically-integrated supply chain, and continued to deliver above-and-beyond experiences to our customers, who are spending more with us than ever before.

Co-Founder and Co-CEO Neil Blumenthal added:

Despite a challenging macroeconomic backdrop, we continue to grow faster than others in our industry. We believe our omnichannel business model, compelling value proposition, and strong consumer brand uniquely position us to capture market share for years to come in both good and turbulent environments,

Warby Parker reported net revenue increased by $14.2m, or 10.3%, to $153.2m Y/Y. This came in slightly below FactSet consensus estimates of $154m.

  •  Active customers increased by 340,000, or 18%, to 2.23 million.

  • Gross profit dollars increased 7% to $89.6m.

  • Gross margin slipped to 58.5% compared to 60.3% in the prior year.

  • For the full year 2022, Warby Parker is reiterating its outlook

WRBY stock is down 4.7% in pre-market trading.

Sea Ltd (NYSE: SE)

Sea Ltd (NYSE: SE) operates an internet and mobile platform, engaging in online gaming services. It operates through the following segments: Digital Entertainment, E-Commerce, and Digital Financial Services.

The company reports fiscal quarterly earnings on 17 May. FactSet estimates include EPS at -$1.30 and sales consensus at $2.8bn.

The SE share price soared in 2020 and 2021 as the growth stock became a favorite among retail investors. Since November it’s plummeted close to 80%.

SE stock may now be considered oversold, and investors will be paying close attention to its latest earnings summary.

ZIM Integrated Shipping Services Ltd (NYSE: ZIM)

ZIM Integrated Shipping Services Ltd (NYSE: ZIM), commonly known as ZIM, is a publicly held Israeli shipping company, and one of the top 20 global carriers. Its strategy to charter its vessels for extended periods gives it a competitive level of stability.

The cargo shipping company went public via IPO in February 2021. ZIM stock has since soared 428%. The share price steadily climbed from IPO to its 52-week high in March 2022 but has since fallen 30%.

ZIM is scheduled to release its Q1, 2022 results on 18 May, before the market opens.

Consensus estimates from FactSet show EPS at $12.57.

If ZIM’s earnings beat consensus estimates by a wide margin, the share price will likely enjoy a rally. But any rally may be short-lived as ZIM’s valuation is relatively high and dependent on freight rates remaining elevated.

If inflation leads to a recession and consumers cut back on unnecessary purchases, freight rates are likely to come back to earth with a bump.

However, some see reason to believe ZIM will continue to report consensus beating returns in 2022. That’s because lower freight rates may still be higher on Y/Y comparisons.

Kohl’s Corp (NYSE: KSS)

The Kohl’s Corp (NYSE: KSS) share price began falling in November 2018, then the pandemic made things considerably worse. The KSS share price started to revive in October 2020 and enjoyed a rally through April 2021. Since then, it has fallen over 25%.

Last month Kohl’s was reportedly under offer from the owners of JCPenney with an $8.6bn bid. However, Kohl’s spurned interest from them and Brookfield Asset Management. Nevertheless, It is understood that private-equity firm Sycamore Partners and Canada’s Hudson’s Bay Co. are also considering a Kohl's buyout.

The company also rejected a push from an activist investor to overhaul the board. Macellum Advisors GP LLC has a 5% stake in Kohl’s, and its push proved there is support in selling the company but not in shaking up the board’s operating plan.

To thrive, the company needs to improve in-store traffic, increase operating margins, and increase prices. Whether it can do so successfully remains to be seen. 

Kohl’s will release its quarterly earnings on Thursday, 19 May. According to FactSet estimates, analysts expect EPS of $0.71 and sales of $3.6bn for the fiscal quarter ending April 2022.

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Topics:
Quarterly Earnings
Industries:
Consumer Discretionary
Consumer Staples
Information Technology
Companies:
Walmart
Sea
ZIM Integrated Shipping Services
Kohl's

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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