In the current market the index funds may appear to in full swing recovery mode to get back to all time highs. Yet overall outlook from majority of companies have 2023 look worse than were 2022 is currently. For the first half of 2022 it was a rough period for many companies in terms of evaluation and stock value. To expect 2023 to fair better while many companies are lowering their expectations is hard to think moving ahead it will be better. Gray clouds are ahead and how long it will last remains to be seen.
Company's Estimates for Fiscal 2023
Walmart
Comp sales for Walmart U.S., excluding fuel, are expected to be about 6% for the second quarter. This is higher than previously expected with a heavier mix of food and consumables, which is negatively affecting gross margin rate. Comp sales for Walmart U.S., excluding fuel, are expected to be about 6% for the second quarter. This is higher than previously expected with a heavier mix of food and consumables, which is negatively affecting gross margin rate.
In short Walmart see's customers financially strained due to inflated food prices. This trickles into customers not being able to spend on merchandise.
Procter & Gamble
The operational cost and currency challenges we faced over the last two years will continue in fiscal 2023. We began the new fiscal year (2022) with consumers facing inflation levels not seen in the last 40 years.
Procter & Gamble which is parent company of multiple consumer goods is anticipating further headwind from consumers spending due to high inflation.
AT&T
Continued low single-digit revenue growth, driven by low single-digit growth in wireless service revenues and a ramp in broadband revenue growth to the mid to high single-digit range, (for 2023).
ATT stock is near 2004 levels which was even before the Great Financial crisis. Imagine purchasing a stock that did not move in value for over 20 years is troublesome.
Then you had e-commerce and after post-covid some tech companies are predicting grime futures.
Shopify's CEO
"We bet that the channel mix — the share of dollars that travel through ecommerce rather than physical retail — would permanently leap ahead by 5 or even 10 years. We couldn't know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match. It's now clear that bet didn't pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn't a meaningful 5-year leap ahead. Our market share in ecommerce is a lot higher than it is in retail, so this matters. Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I'm deeply sorry for that."
Shopify layoff 10% of its employees as it struggles due to the over estimate of the US consumer spending.
Conclusions
Real inflation is hurting a majority of Americans which in turn is effecting the profitability of many companies across the board. On the surface everything may appear to be rising in value but the reality is there are dark clouds ahead. Whether or not Wall Streets current bull run continue indefinitely or be pull down based on real economic slowdown remains to be seen.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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