On our calendar for the week ahead, we are looking for earnings reports from Walmart WMT and The Home Depot HD on Tuesday, NVIDIA NVDA and Target TGT on Wednesday, and Macy’s M on Thursday.
With the recent launch of Walmart+ membership in the United States, the wide-moat retailer has been focused on improving its approach to its key international and e-commerce growth areas. We think Walmart’s efforts to work on its international portfolio, to concentrate on the most attractive opportunities while expanding its e-commerce platform, will pay off. This, coupled with Walmart’s strong brand, makes it the only American retailer we believe can compete with Amazon.com AMZN. Companies that do not have the same scale as Walmart, like Target, are vulnerable to the competitive onslaught in the retailer industry.
Because consumers have so many choices, Macy’s is struggling to stay relevant--and the pressure of the coronavirus pandemic has only made it more difficult. Although the no-moat retailer has 600 full-line stores in both the top-tier malls and weaker malls in the U.S., Macy’s will not be able to bounce back from the shutdowns and economic fallout that have followed in the wake of the coronavirus.
While the coronavirus has loomed over the U.S. economy like a dark cloud, there is a bright spot: the housing market. As the world's largest home improvement retailer, Home Depot has been able to share this light. We also foresee potential for NVIDIA after its announcement to acquire ARM from the SoftBank Group.