Cramer: Earnings from retailers like Walmart, Home Depot show ‘survival of the fittest economy’

Earnings

CNBC’s Jim Cramer said Tuesday that large retailers in the U.S. such as Walmart benefited from the coronavirus-related restrictions on businesses, contending this week’s earnings reports will reflect the top-heavy nature of the economy. 

“It looks like the big guys won. You have them basically cordoned off as essential services. So many other companies, little companies, medium, small, just couldn’t compete,” Cramer said on “Squawk on the Street.” “This is what happens when you have a survival of the fittest economy.” 

Cramer’s comments came shortly after Walmart reported first-quarter earnings, which showed U.S. e-commerce sales spiked by 74% and same-store sales rose 10% as the pandemic intensified. Its stock was up less than 1% in morning trading.

Home Deport also reported earnings before the bell, notching a 7.1% increase in revenue although profit fell, weighed down by coronavirus-related expenses. Its stock was down nearly 2% on Tuesday. 

“I mean, Home Depot literally had to keep traffic back. Costco is doing the same thing. They had to hold back traffic because they were trying to do it safely,” said Cramer, who complimented Walmart’s preparedness and response to the pandemic. He specifically praised Walmart CEO Doug McMillon for investing in its e-commerce business. 

“These are great American companies that are on fire,” Cramer added. 

The “Mad Money” host has previously said that a “winner-take-all, loser-take-none” dynamic explained why the stock market has been able to bounce back so quickly from coronavirus-driven lows in late March. 

“This is the big triumphing over the little guy and if you don’t mind making money in the market off that, that’s what’s going on,” Cramer said in mid-April. 

E-commerce giant Amazon has also solidified its dominance during the pandemic, Cramer has argued. But he said Tuesday he believes these other retailers will be able to survive alongside Amazon.

“There’s room for Target. There’s room for Lowe’s,” Cramer added, ahead of the retailers’ expected earnings reports on Wednesday. ”And that’s what we’re going to discover this week.” 

Articles You May Like

How to protect your portfolio against risks tied to President-elect Trump’s tariff agenda
Disney debuts its latest cruise ship, Treasure, as part of a plan to double its fleet by 2031
Budget travel icon Spirit Airlines files for bankruptcy protection after mounting losses
NBA, Warner Bros. Discovery agree to settle lawsuit over live game rights
Elon Musk endorses Trump’s transition co-chair Howard Lutnick for Treasury secretary

Leave a Reply

Your email address will not be published. Required fields are marked *