If WalmartInvestors will be looking for clues to whether shoppers are becoming more cautious as the company reports its quarterly earnings on Thursday.

This retail company is being watched closely as an indicator of inflation.

Steph Wissink is a Jefferies retail analyst. She stated that any kind of behavior change, it will be detected by the analysts. Walmart’s voice is more important when it comes to ‘How healthy are you the consumer’.

After a stimulus-and-pandemic spending spree, inflation has rapidly risen. This raises concerns about Americans’ spending habits. The consumer price index rose by 7% in December compared with a year earlier, according to the Bureau of Labor StatisticsPlease see the following: marked the fastest increase in nearly 40 years. The prices of food have increased by 6.3% over the past 12 months. This is because grocery purchases are among households’ most common.

Major companies that make consumer goods, such as PepsiCo, Hershey, Coca-Cola Proctor & Gamble, have passed on price increases to customers — and argued brand loyalty has kept sales strong. Pepsi executives said on an earnings call last weekGatorade is one of the most popular snacks and drinks that customers will buy. Walmart stocks many of these products.

Wissink said that the background is changing. Consumers are spending freely this holiday season, despite being challenged by out of stock, shipping delays, and other supply chain snarls. Walmart will report its earnings for the period ending Jan. 31 and will also include information about the holiday season. However, investors are more interested in trends that occurred over the previous few weeks.

Wissink stated that consumers might be beginning to reconsider opening their wallets when prices rise week-on-week and the government no longer provides stimulus checks.

Walmart is able to see the mindset of consumers in a unique way. Nearly 90% of Americans are located within 10 miles of Walmart stores. It cuts across states, geographical areas, and income levels. Based on the sales figures for the first nine months of fiscal year, nearly 60% of Walmart’s net U.S. sales are made up of food, which is one of the most affected by inflation.

Analysts are mixed about whether inflation will help or hurt Walmart’s sales — and its margins.

Wissink explained that lower-income customers will likely buy less but Walmart will still grab more middle- and high-income shoppers because Walmart is known for its value. Her buy rating is for shares of the company and her price target $184 is 37% higher than the current stock trading. According to Refinitiv, this is higher than the average price target for analysts of $165.44.

According to Scot Cicarelli, Truist Securities’ retail analyst, Walmart customers feel a bit betrayed. There are no other options than the privately owned German discounter Aldi and dollar stores. Dollar General. According to him, this means that Walmart will see a decrease in its overall spending as well as an upsurge in sales.

He rates the company neutrally and targets a price of $153.

Walmart CEO Doug McMillon has said the retailer can use inflation as a competitive advantage. McMillon spoke to CNBC in mid-November.Squawk BoxThe company’s goal is to outperform its competitors and gain market share. This will be done by absorb rising shipping and labor costs, and not passing them along in price rises.

Those comments — and similar ones by Target — sparked a sell-off.

Walmart did not provide an outlook for the fiscal year 2023. For the full fiscal year, analysts expect earnings to be $6.70 per share with revenue of $588.36billion. That’s an improvement from $6.42 for fiscal 2022 which was $6.42.

In times of inflation shoppers will tend to stick with the same pattern: Shop more at Value Retailers. For discounted products, use coupons or hunt store aisles. You can trade down to cheaper brands like a private label from grocers. Buy smaller packages. Avoid discretionary purchases, like a shirt and a gallon of cream.

Shoppers have noticed price hikes and begun to adjust in some of those ways, said Krishnakumar Davey, president of strategic analytics at IRI. According to the survey conducted by market research company IRI in January, more than 90% of shoppers said that they are concerned about rising grocery prices.

A survey revealed that 67% low- and mid-income shoppers and about half the high-income customers said they’re changing their shopping options due to higher grocery prices. Nearly half (48%) of middle-income and low-income customers say that they seek out more deals and discounts, while a third said they cut back on unnecessary items.

Inflation could be the trigger for a reversal in pandemic pattern, he said. Americans had traded up to pricier food and beverages — such as a higher-end steak or a gourmet pasta sauce — to mimic the restaurant experience as they had fewer other places to spend their dollars. In an effort to decrease Covid exposure they consolidated their store trips and filled larger baskets.

He said that retailers could see “cherry picking” in the months ahead as shoppers with limited cash flow shop at multiple stores to compare prices for staples such as milk and eggs.

Walmart missed stock gains in the last year. The shares of Walmart are now down 7 percent over the last 12 months, which is behind the 14% gain. the S&P 500and the 2% gain of an exchange-traded fund for the retail sector,As of Tuesday’s closing

Walmart shares were closed on Tuesday at $134.37. This is a decrease of 1%. Its market value stands at $372.73 million.

Chuck Grom from Gordon Haskett is a retail analyst. He said that in addition to the holiday results and inflation impacts, he also wants to know about Walmart’s new efforts to make money. Walmart Connect, its subscription service Walmart+, is being developed to help it grow. delivery business, GoLocal.

Grom pointed out that the other retail sector has emerged stronger from this pandemic. Target attracted more shoppers to its same-day services like curbside pickup, and home delivery through Shipt. American shoppers are more likely to renew their memberships in warehouse clubs such as Sam’s Club (owned by Walmart), Costco BJ’s Wholesale. And Home Depot Lowe’sThis has sparked a renewed interest in landscaping and home improvements.

He said that Walmart is the only one who can judge.

“Investors want to know if Walmart has been a Covid winner. Do you think Walmart is a more successful business than two years ago. It’s hard to argue otherwise.