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What To Expect From Retail Earnings Week

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We’ve got some of the biggest and baddest retail giants releasing their Q1 reports this week as this outstanding earnings season comes to an end. I expect to see some solid forward guidance for brick-and-mortar retailers as the US economy swiftly reopens and foot traffic begins to pick up. You can see analyst expectations from the most important reports to watch out for this week in my chart below.

There have been some notable share price movements for stocks reporting tomorrow. Macy's (M - Free Report) shares have had a massive 2-day rally of 14% on Friday and another 6% today going into these quarterly results as traders bet on strong full-year guidance following the CDC's announcement that masks are no longer required for those who are vaccinated.

This is a dark contrast to what we see with Home Depot (HD - Free Report) shares, which had been a big beneficiary of the pandemic. Home improvement projects were booming throughout the pandemic, and Home Depot swooped up that demand being one of the few retailers to remain open. This outstanding secular performance by HD was illustrated throughout the lockdowns, with record quarterly results in Q2 of 2020 (the depth of the pandemic). HD is down 6.5% from its high just one week ago as investors book profits going into tomorrow morning's earnings report.

Walmart (WMT - Free Report) is 9% off its all-time high, which it hit on the first day of December, and has lost a lot of momentum in recent months. WMT's 50-day moving average dipped below its 200-day moving average (aka the death cross) at the end of March. Investors are hoping tomorrow's earnings will lift WMT out of this trading glut. My upside share price expectations for this report tomorrow are low, due to its past 6 quarterly releases resulting in negative price action.

Dillard’s Results Signal Strong Q1 For Department Stores

Dillard's (DDS - Free Report) reported an absolute blowout quarter on Thursday with record profitability to kick off this retail earnings season that has sent DDS up over 40% in the past two trading days. The company announced it would be implementing a $500 million stock buyback program and reinstated its dividend.

This is a positive signal for other department stores reporting this week like Macy's (M - Free Report) , TJX Companies (TJX - Free Report) , Kohl's (KSS - Free Report) , and Ross Stores (ROST - Free Report) .

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