Big box retailers see foot traffic tumble from 2021, analysts unfazed
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Big box retailers like Walmart (NYSE:WMT), Costco Wholesale Corporation (COST), and BJâs Wholesale Club (NYSE:BJ), have seen foot traffic fall from 2021âs record levels, per Placer.ai.
The data revealed that July visits to Costco (COST), BJâs (BJ), and Walmartâs (WMT) Samâs Club exceeded 2019 levels by 3.4%, 7.5%, and 10.5%, respectively. Placer.ai analysis indicated that a jump in membership sign-ups as only essential retail remained upon amidst the pandemic has proven sticky into the reopening.
However, the figures all showed marked decreases over the course of the summer. In fact, July 2022 foot traffic to Costco, BJâs, and Samâs Club saw 8.9%, 8.0%, and 6.0% decreases, respectively from the prior year. While the analysis suggests that this pullback is merely normalization from record-breaking one-stop shopping at the retail giantsâ locations, the year over year drop highlights the tough comparisons each must contend with.
Nonetheless, Baird analyst Peter Benedict advised clients that earnings preannouncements by the likes of Target (TGT) and Walmart (WMT) have done enough to temper expectations ahead of the earnings prints. 
âWalmart (WMT) and Target (TGT) feel tactically de-risked following intra-quarter updates, and BJâs Wholesale Club (BJ) remains well positioned to deliver on expectations given high grocery/low general merchandise exposure,â he told clients on Monday. âFrom a top-line perspective, we are encouraged by sales trends in food/consumables and believe WMT should benefit from trade-down during this period of heightened inflation.â
The bullish opinion on Walmart despite traffic trends declining adds to broadly optimistic views on Wall Street. Indeed, even generally bearish analysts at Morgan Stanley recently opined that that the bad news is priced in for the Arkansas-based retail giant.
He reiterated Buy-equivalent ratings on all three names ahead of earnings reports due in this week. Benedict was also bullish on Home Depot (NYSE:HD) and Loweâs (NYSE:LOW), though he indicated a clear preference for Home Depot (HD).
âWe see more fundamental risk at LOW given greater seasonal/DIY exposure,â he explained. âBig picture, sentiment likely remains challenged/choppy until better clarity on 2023 emerges.â
Read more on why Piper Sandler is taking the opposite position on the two home improvement leaders.