Earnings season is in full swing, and as customers and investors get more choosy about where to place their money, results are more important than ever.
As the big-box retailers report quarterly results this week, it's not just impressive when they beat expectations or defy the economic odds; it's crucial.
Related: Home Depot sends a very different message about the economy
And depending on how the previous quarter went, different retailers might have different outlooks for the months ahead.
Take, for example, Home Depot (HD) -), which reported revenue of $37.71 billion, ticking above Wall Street expectations by 0.28%. Earnings per share came in at $3.81, also higher than the anticipated $3.76. Digital sales increased by 5%.
"[The] most important observation we've made is that the worst of the inflationary environment is behind us," Chief Financial Officer Richard McPhail predicted on the earnings call.
Cheerier earnings make for cheerier executives. At least, that's the usual case.
One of the most highly anticipated and scrutinized report comes from Walmart (WMT) -), which reported Q3 earnings on Thursday. The retail giant largely beat analyst expectations but struck a notably different tune.
Walmart reported $159.44 billion of revenue for Q3 — a 0.59% beat. Earnings per share came in at $1.53, 0.39% above expectations. But the retailer remains cautious.
Walmart beats estimates, still warns investors
Just because Walmart had a better-than-expected quarter doesn't mean its leadership believes it's out of the woods.
Higher interest rates and lower consumer spending, for example, might be reason for caution in the coming months.
"Recently, we've experienced a higher degree of variability and weekly performance in between holiday events in the U.S., including seeing a softening in the back half of October that was off trend to the rest of the quarter," Chief Financial Officer John David Rainey said on the earnings call.
"This gives us reason to think slightly more cautiously about the consumer versus 90 days ago," he added.
For many of those reasons, customers are probably going to be choosy this holiday season, Rainey added.
But it's not all bad news. Deals, like its ongoing holiday promotions and other sales throughout the second half, have bolstered Walmart's efforts even as customers watch their wallets a little more carefully this year.
“Our events have been strong,” Rainey said. "We’ve been pleased with those. Halloween was good overall. But in the last couple of weeks of October there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
Despite heavy promotional activity and a 3.5% lift in shopper visits, Walmart customers are "still very choiceful and using discretion" when they do come in.
Still, Walmart may be in a strong position to win, given its reputation as a lower-price-point retailer.
Some promotions are already here. They feature popular gifts at deeper discounts, including a pair of Beats Studio3 noise canceling headphones for $99 off. Walmart's popular Black Friday promotions begin on Nov. 22. Walmart+ members get first access at noon Eastern, with the general public able to join at 3 p.m.
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