This Week Brings the Most Important Consumer Earnings Report of the Season

In April, despite rising trade tensions triggered by former President Donald Trump, Costco Wholesale Corp. still managed to report a gain in sales. Amazon.com noted it hadn’t felt any noticeable impact from tariffs, while toymaker Mattel Inc. temporarily stopped offering projections about how tariffs might affect its business. Meanwhile, restaurants suggested that customers were becoming more cautious with spending, and import data began to show a decline.

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However, a clearer picture of how U.S. consumers are coping under these trade-related pressures was expected when Walmart Inc. released its first-quarter earnings report. D.A. Davidson analyst Michael Baker described the retailer’s report as the most significant of the season for gauging consumer strength. He noted that with continued concerns about a possible recession, Walmart's performance and commentary carried added importance for investors.

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Baker emphasized that Walmart’s results would not just reflect on the company itself, but also serve as a broader signal about the health of the American consumer. “What they say will shape investor perception not only of Walmart, but of the consumer economy as a whole — particularly because of all the uncertainties surrounding tariffs and their effects on both supply and demand,” he explained.

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Back in February, Walmart had projected its first year-over-year quarterly profit decline in three years, citing economic uncertainties and increased costs impacting shoppers. Yet, the company’s stock still climbed about 60% over the past year. Investors were optimistic that large-scale retailers like Walmart would manage better than smaller competitors during challenging economic times.

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Even so, analysts believed that Walmart’s future guidance and executive insights into consumer behavior would be more influential than the specific numbers from the recent quarter. Baker said retail data through March and April seemed solid. Easter shopping and efforts by businesses and households to stock up in advance of potential tariff hikes may have contributed to this strength. He also noted that labor market conditions had remained steady, which typically supports consumer spending.

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“Consumers are definitely aware of tariffs — we’re seeing it in sentiment surveys,” Baker said. “But with the job market still healthy, most people have income, and that remains the biggest driver of actual purchases.”

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Other retail players have shown mixed signals as well. Costco’s April sales rose by 7%, and Amazon reported no slowdown in demand, adding that most sellers on its platform hadn’t adjusted prices in response to tariffs. Amazon further mentioned that its wide array of third-party sellers might help customers continue to find value despite potential price pressures.

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On the supply side, questions remained about Walmart’s current inventory levels in its warehouses and stores across the U.S., and how the company plans to handle future ordering amid higher import costs. With tariffs potentially raising prices, Walmart’s purchasing strategies could influence what consumers ultimately pay. Baker estimated the retail giant typically has four to six weeks’ worth of products in stock at any given time.

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In its latest annual report, Walmart acknowledged that a significant share of its non-grocery merchandise in U.S. stores is sourced from outside the country. However, thanks to its massive size and negotiating power, Walmart often has more influence to pressure suppliers into keeping costs manageable for consumers.

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Wall Street is also watching for signs that overall import volumes are dropping. Recent data from the Marine Exchange of Southern California indicated that fewer container ships had been arriving at the ports of Los Angeles and Long Beach, key gateways for goods from Asia.

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While many U.S. tariffs aimed at specific countries remain paused, China continues to face steep trade barriers, with tariffs on most Chinese goods hovering around 145%. However, Trump recently suggested a lower 80% tariff might be more appropriate and said Treasury Secretary Scott Bessent would determine the final rate. Meanwhile, trade talks between U.S. and Chinese officials were scheduled to take place in Switzerland over the weekend.

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Beyond Walmart, twelve S&P 500 companies were expected to report earnings in the same week, including Deere & Co., which could shed light on how tariffs are affecting the agricultural sector. Other reports due included Take Two Interactive, following a positive update from Electronic Arts, and fast-casual chain Cava Group, arriving shortly after Chipotle warned of more cautious consumers. Online education firm Chegg was also on the earnings calendar.

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Additionally, Cisco Systems was set to report results, with analysts anticipating commentary on artificial intelligence and quantum computing. UBS analysts also planned to monitor Cisco’s business with the federal government, which represents roughly 10% of its revenue and has faced pressure from efforts to trim federal spending.

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Topgolf Callaway Brands was expected to offer insights into how economic uncertainty was affecting recreational spending. Though many of its products are made in countries like China, Mexico, Vietnam, and Bangladesh, analysts noted that industry trends and demographic shifts could still benefit the company in the long run.

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The footwear industry also remained in focus. Birkenstock and Boot Barn Holdings — both of which rely heavily on imported goods — were slated to report earnings as investors looked for further signs of how the trade war and inflation were reshaping consumer habits.

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