Walmart is set to announce its quarterly earnings on Thursday morning, prompting investors to assess whether the decline in retail sales in January was merely a temporary setback or indicative of a larger trend.

As the leading grocery retailer in the U.S., Walmart often serves as an important indicator of consumer spending patterns. The company’s report will cover its performance during the holiday season and offer projections for the upcoming year. Walmart’s executives may also provide insights into the U.S. economic climate and discuss potential impacts from federal policy actions like tariffs.

Here’s what analysts expect for Walmart’s fiscal fourth quarter, based on a survey conducted by LSEG:

• Expected Earnings per Share: 64 cents
• Projected Revenue: $180.01 billion

Retail sales for January fell short of forecasts, triggering concern among investors. Retail sales dropped by 0.9% for the month, contrasting with Dow Jones’ estimate of a mere 0.2% decline.

Various restaurant chains, including Restaurant Brands’ Burger King and Popeyes, also noted weak performance in January despite reporting improved sales in the fourth quarter.

However, these restaurants and some retail experts attribute the soft figures to temporary challenges, such as winter weather, consumers taking a breather after holiday spending, and disruptions caused by the Los Angeles wildfires.

The holiday season delivered encouraging results for the retail sector, with sales rising 3.8% year-over-year, totaling $964.4 billion in November and December, according to the National Retail Federation. This growth mirrors more standard pre-pandemic increases. Average growth in holiday sales was 3.6% from 2010 to 2019, as noted by NRF data, but surged during the Covid-19 pandemic.

Walmart might benefit from unique circumstances, regardless of the economic climate. The retailer has experienced significant growth in online sales, achieving double-digit growth for ten consecutive quarters. While its advertising division and third-party marketplace are smaller compared to Amazon, both sectors have shown growth and improved profit margins compared to Walmart’s traditional retail operations.

Moreover, Walmart has increasingly attracted higher-income shoppers. CEO Doug McMillon indicated in November that households earning over $100,000 accounted for 75% of market share gains in the third quarter.

Some investors have raised their expectations for Walmart. Simeon Gutman, a retail analyst at Morgan Stanley, increased Walmart’s price target to $153, highlighting the retailer’s newer and more lucrative revenue streams, such as its advertising sector and Walmart+ subscription service.

As of Wednesday’s market close, Walmart’s shares have surged approximately 83% over the last year, finishing at $104.00—up about 15% this year alone, significantly outperforming the S&P 500, which has seen about a 4% gain during the same timeframe.