In this article, we will discuss the 5 Largest Retailers in the US in 2022. If you want to read our analysis of the retail market, you can head on to the 15 Largest Retailers in the US in 2022.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Market Cap: $115.75 billion
Lowe’s Companies, Inc. (NYSE:LOW) is the world’s second-largest home improvement retailer operating with 1,969 locations and 230 dealer-owned stores across Canada and the United States. The company offers products mainly in the home décor category, which accounts for about 65% of the company’s total sales. Based on US Census statistics and management’s estimations of market size, Lowe’s Companies, Inc. (NYSE:LOW) has a double-digit share of the domestic home improvement market. The company’s key customers include professional business clients and individuals.
Lowe’s Companies, Inc. (NYSE:LOW) is expected to post sales of over $97 billion in the fiscal year 2022, as compared with $96 billion in the fiscal year 2021. The company is planning on reducing its exposure to the Canadian market and recently announced the intention to sell its Canadian business for $400 million to private equity firm Sycamore Partners.
Ackman discussed some of the secular tailwinds he expects Lowe’s Companies, Inc. (NYSE:LOW) to benefit from over the long-term in Pershing Square’s Q2 2022 investor letter:
Lowe’s Companies, Inc. (NYSE:LOW) ‘s is a high-quality business with significant long-term earnings growth potential underpinned by a superb management team that is successfully executing a multi-faceted business transformation.
COVID-19 was a transformational event for the US housing market, causing homeowners to invest significantly in their homes as they shifted nearly all their daily activities to the home environment, including work, school, and leisure. The increased use of the home during COVID, in turn, increased the need for repair, maintenance and remodel activity, which significantly benefited Lowe’s same-store sales. As consumers return to spending more time and money on out-of-the home activities the near-term demand for certain Do-It-Yourself (“DIY”) categories has decreased. Moderation in DIY demand combined with increased mortgage rates and decreased housing affordability has caused many market participants to become concerned that the home improvement industry may give up a significant part of their COVID pandemic sales gains.
While we expect that there will be some near-term volatility and continued moderation of DIY demand, growth remains strong for projects requiring professional installation (the “Pro” business) due to a substantial backlog of projects undertaken during COVID, which should support industry growth in the near-term. In addition, we believe the medium[1]term growth outlook for the home improvement industry remains strong as demand is likely to normalize at a materially higher level as compared to the pre-COVID era. For the decade prior to COVID, home improvement industry sales were notably depressed relative to their long-term averages as a percentage of overall consumer spend and GDP and have only now returned to their longer-term historical levels. Moreover, we believe COVID has permanently renewed consumers’ focus, appreciation, and utilization of their homes, which combined with higher home equity values, strong consumer balance sheets, low levels of home inventory for sale and an aging housing stock that requires an increasing level of maintenance, will likely result in a structurally higher level of ongoing home industry spending in the future. In the most recent quarter demand strengthened throughout the quarter as DIY consumers returned from summer vacations and focused on less seasonal home improvement projects… (Click here to read the full text)
4. CVS Health Corporation (NYSE:CVS)
Market Cap: $129.93 billion
Headquartered in Woonsocket, Rhode Island, CVS Health Corporation (NYSE:CVS) is a major healthcare service provider, operating pharmacy chains across the United States. The company has expanded its services since 2018 after its acquisition of Aetna. The company operates about 10,000 retail drugstores in the United States.
CVS Health Corporation (NYSE:CVS) posted sales of $290 million in 2021, up 8.5% from $267.9 million in 2020. Moreover, the company has been performing well in 2022, and recently the company announced Q3 2022 results, in which the management raised its full-year EPS guidance and now expects a full-year adjusted EPS of $8.55 to $8.65 compared to the previous expectation of $8.40 to $8.60.
Vitava Funds mentioned the company in its Q3 2022 investor letter. Here is what the fund said:
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.
3. Costco Wholesale Corporation (NASDAQ:COST)
Market Cap: $213.15 billion
Costco Wholesale Corporation (NASDAQ:COST) operates 838 stores around the world and is considered the leading warehouse club. The company generates a majority of its sales in the United States (73%). The company serves individual customers. The main offerings of the company include non-food merchandise, fresh food, and warehouse ancillary. Costco Wholesale Corporation (NASDAQ:COST) also offers its products online, with about 7% of the revenue coming from e-commerce sales.
The management of the company recently had a meeting with Morgan Stanley and asserted that 2023 could be a special year for Costco Wholesale Corporation (NASDAQ:COST). The management stated that the inventory build-up is now clearing off, and the company is continuing to gain market share in the US.
The ClearBridge Investments Global Infrastructure Income Strategy likes Crown Castle International Corp. (NYSE:CCI) ‘s opportunity in the 5G space, as outlined in its Q1 2022 investor letter:
US communications company Crown Castle International (NYSE:CCI) was the largest detractor from quarterly performance. Crown Castle is the leading independent owner and operator of wireless communications infrastructure in the US with a portfolio of approximately 40,000 towers. The stock underperformed as, driven by rising interest rates, investors rotated away from defensive into more value-oriented sectors. Communications infrastructure remains attractive, however, as companies continue to deploy greater capital spend to support the strong tailwinds from 5G.
2. The Home Depot, Inc. (NYSE:HD)
Market Cap: $288.07 billion
Founded in 1976, The Home Depot, Inc. (NYSE:HD) is the world’s biggest retailer of home improvement products operating 2,317 stores in the United States. The company sells a wide variety of products, including décor products, building materials, and home improvement articles. In 2015, The Home Depot, Inc. (NYSE:HD) acquired Interline Brands, which allowed it to expand its product range.
The company has continued to post strong results in the current year and delivered revenue of $82.7 billion in the first half of 2022, compared to $78.6 billion during the first half of 2021. The Home Depot, Inc. (NYSE:HD) is expecting to post sales of $156 billion during the current year.
Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm had to say:
Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.
1. Walmart Inc. (NYSE:WMT)
Market Cap: $379.80 billion
Walmart Inc. (NYSE:WMT) is the world’s biggest retailer operating 10,500 stores around the world. The company sells a mix of general products and food items. The domestic market accounts for a majority of the company’s sales, accounting for 82% of the total revenues in the fiscal year 2022. The company also has a stake in leading e-commerce sites like JD.com.
The company posted strong results during the fiscal year 2022, with revenues of $572.7 billion, up from 2.42% from $559.1 billion during the fiscal year 2021. The company continued to increase its e-commerce sales as well in fiscal year 2022, with the segment posting a YoY growth of 11.0%.
Here is what Leaven Partners has to say about Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter:
In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.
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