By Senad Karaahmetovic

Evercore ISI analyst Greg Melich said he and his colleagues were “swamped” with questions this week after Walmart (NYSE:), Target (NYSE:), Home Depot (NYSE:), and Lowe’s (NYSE:) reported earnings below market expectations.

Questions from investors were predominantly focused on the current state of consumers, the reasons retailers failed to notice, and which categories will hold their value.

Melich stated that consumers remain ok, and reminded investors of April’s 6% growth in retail sales. He sees two causes why margins fell.

“[First]As we approach peak stimulus, $ sales have fallen yoy in many Gen Merch categories. HSD units are also falling. Unit inventories in General Merchandise is up by low teens yoy, as are those for Electronics and Home Furnishings. Clearing inventory is more difficult because it’s harder to get past the price. [Secondly] Inflation is pressuring costs across the P&L, but particularly in freight. Incrementally $6 diesel cost and supply chain investments (see eComm survey for more),” the analyst said in a client note.

Analysts list categories with high price power, non-perishable goods with some Pro/service linkage as the categories most likely to perform well in current conditions.

The Target stock is down 30%, while Walmart’s stock price has fallen to a 2-year low.