Experts anticipated that retail spending would moderate after the high points reached during the COVID-19 lockdowns, and the latest results from Walmart Inc. and Home Depot Inc. bear that out.


quarterly results beat earnings and sales expectations, and full-year guidance was lifted. While e-commerce sales are expected to reach $75 billion by the end of the year, Walmart U.S. e-commerce growth in the fiscal second-quarter was 6% compared with 97% growth last year.

Home Depot’s

quarterly sales exceeded $40 billion for the first time, according to a statement from Chief Executive Craig Menear, with earnings and sales both beating the Street as well. But same-store sales fell short, prompting the biggest share decline in nine months.

See: Dow drops nearly 300 points after weaker-than-expected retail sales data

Walmart and Home Depot reported earnings on the same day that July retail sales data was released, with the data showing a 1.1% month-over-month decline. Sales are still higher than pre-pandemic levels, but there has been a slowdown.

“The shift to spending on services was expected as more of the economy reopened, and this year’s move of the Amazon Prime Day promotion to June may have siphoned off some sales that normally come in July,” wrote the National Retail Federation in a report following the release of the government data. Inc.

hosted its annual Prime Day event on June 21 and 22 this year.

The NRF also highlighted a number of other factors having an impact on the retail category at the moment, including the delta variant of the coronavirus that causes COVID-19, supply chain challenges and the end of stimulus spending.

Still, “the consumer and broader economy continue to display steady strength aided by advanced tax credit payments and strong gains in the labor market and personal incomes,” the NRF report said.

Also: U.S. retail sales slump 1.1% due to shortage of cars and Amazon Prime hangover

Walmart Chief Executive Doug McMillon says the back-to-school season is off to a good start and emphasized the strength of the underlying business.

Moody’s also talked up the advantages of the company’s vast fleet of stores.

“The meaningful upping of guidance for Q3 confirms our view that Walmart will continue to run on all cylinders, leaning heavily on its stores as it remains one of the premier global retailers by any yardstick,” said Charlie O’Shea, Moody’s vice president, in a statement.

Walmart U.S. made market share gains in grocery, but GlobalData points out the “softness” in general merchandise categories like apparel and home.

“Walmart has two issues here,” wrote Neil Saunders, GlobalData managing director.

“First, its core consumers are now more financially constrained and so are less willing and able to buy discretionary goods. Second, Walmart still has a lot of work to do in improving categories like apparel and home to make them more enticing and a destination.”

Read: Fast-food chains and off-price retailers will gain from expanded SNAP benefits, says Cowen

Home Depot’s Menear discussed some of the changes in consumer behavior that the company has noticed.

“We have seen a shift in pattern of sales within the week as our weekday sales performance has actually strengthened relative to the weekend,” he said on the earnings call, according to a FactSet transcript.

“We attribute this to consumers returning to travel and other recreational activities, and while the consumer is returning to pre-pandemic activities, we continue to see them engaged in home improvement projects.”

Watch: 3 market trends investors should watch in the second half of 2021

Even with these shifts, spending on goods and products is expected to stay the course.

“The consumer has continued to be resilient and recent price increases brought on by constraints in the supply chain have not dampened the robust demand seen during the past year,” said Jack Kleinhenz, the NRF’s chief economist, in the aforementioned report.

“If retailers could find more inventory, they could sell it. Going forward, consumers are a bit fearful again as we approach another possible wave of COVID-19 infections, but they’ve learned to live with the virus and shopping continues.”

Walmart stock is up 4.6% for the year to date. Home Depot shares have gained 20.3% for the period.

The benchmark Dow Jones Industrial Average

is up 15% for 2021 so far.

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