Walmart (WMT) earnings Q1 2023

Walmart will report earnings on Tuesday before the bell, as investors and economists look for clues about how U.S. consumers are enduring inflation — and whether they have begun to pull back on spending.

Here’s what Wall Street expects for the company’s fiscal first quarter, according to Refinitiv consensus estimates:

• Earnings per share: $1.48 expected
• Revenue: $138.94 billion expected

As the nation’s largest retailer, Walmart’s sales can reflect broader economic trends and consumer sentiment. For instance, as Americans got their first doses of Covid-19 vaccines a year ago, the big-box retailer said it saw a pop in sales of items related to personal care, celebration and travel, including teeth whitener and new clothes. Now, industry-watchers will scour for signs of shoppers trading down to cheaper brands or smaller packs or skipping over discretionary items like apparel and electronics.

Walmart’s earnings report coincides with another much-watched metric. The government will report retail sales numbers for April on Tuesday morning. The fresh data points will give the markets a “measuring stick,” said Steph Wissink, a retail analyst for Jefferies.

“Walmart touches a lot of American consumers,” she said. “It also has a very strong pulse on a consumer segment that tends to be the most sensitive.”

Inflation remains at a near four-decade high. The consumer price index, a broad measure of prices for goods and services, increased 8.3% in April compared with a year ago, according to the Bureau of Labor Statistics.

Grocery, Walmart’s top sales category, is one of the hard-hit categories. Food costs rose 9.4% in April on a 12-month basis, according to unadjusted data from the BLS.

Gas costs have also shot up to a national average of $4.483 per gallon as of Monday, according to AAA — with prices even higher on the West Coast and in the Northeast. Prices at the pump began to noticeably climb in March as Russia waged war in Ukraine.

Inflation is expected to lead to higher sales for Walmart as shoppers turn to the retailer because of its reputation for value, said Chris Horvers, a retail analyst for J.P. Morgan. However, he said, over the longer term, the discounter faces risks if lower-income households buy only necessities or if it must take a hit to profits to keep prices low.

“Walmart is in a moment when they are gaining share,” he said. “If the environment continues the way it is, you’re going to have to see Walmart start investing in price and at the same time, you could have — for the bottom of the [income] funnel — loss around the more discretionary categories as well as some of the consumers trade out of Walmart into the dollar store channel.”

Shares of Walmart closed Monday at $148.21. The stock has risen about 2.5% so far this year, outperforming the broader market as investors seek out consumer staples among…