The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?
A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
and HP Inc.
along with videoconferencing platform Zoom Video Communications Inc.
and electronics chain Best Buy Co Inc.
All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.
PC shipments have fallen at rates not seen since at least the 1990s. Adobe
has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases.
However, results from Target
on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook.
Among smaller retailers, discounter Ross Stores Inc.
hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
noted “macro uncertainty” and “increasingly inconsistent” demand.
This week in earnings
The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead.
But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines.
FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter.
Elsewhere on Monday, J.M. Smucker Co.
— best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
report results on Monday as well. Fast-food chain Jack in the Box Inc.
reports Tuesday. Tractor and construction-vehicle Deere & Co.
reports Wednesday, following production and supply-chain snarls but steady demand.
The calls to put on your calendar
Clothing demand, discount demand: Urban Outfitters Inc.
reports Monday, while Burlington Stores Inc.
and dollar-store chain Dollar Tree Inc.
report on Tuesday.
The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”
Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge.
Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results.
The numbers to watch
Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as…
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