What's going on?

There wasn�t much to separate the Brits from the Yanks on Wednesday, with Walgreens Boots Alliance, Macy�s, Sainsbury�s, and Greggs all reporting similar-looking earnings updates.

What does this mean?

Stateside, drugstore chain Walgreens � which recently attracted a takeover bid from private equity firm KKR � saw its stock fall 6% after it reported worse-than-expected quarterly revenue and profit. Department store Macy�s, on the other hand, didn�t suffer as big a decline in its holiday sales as investors had feared, and its shares rose 2%.


It was the same story across the Atlantic on Wednesday, with holiday revenue at Sainsbury�s � the UK�s second-biggest grocery chain � falling by less than expected. The shrinkage of its non-food product sales was partly offset by growth in its grocery business, which contributes three-quarters of its revenue. Baker Greggs, meanwhile, continued to lead a healthy lifestyle: it�raised its annual profit forecast yet again, partly thanks to its lineup of vegan-friendly snacks.

Why should I care?

The bigger picture: Consumo wrestling.

The services sector represents 80% of America’s economy and 85% of Britain’s, and it�s largely driven by consumer spending. It makes sense, then, that both countries � and their retailers � rely on consumer spending for the vast majority of their growth. But Walgreens� negative update and Greggs� positive one � at a time when American shoppers have been doing their bit and the UK�s haven�t � is a reminder that consumer spending trends aren�t all-encompassing: retailers� earnings might still exceed investors’ expectations, and stock prices might still rise.

For markets: Where earnings go, dividends follow.

American companies paid investors almost $500 billion in dividends�last year � a new record � and analysts predict that�ll rise another 3% this year. Companies have also recently supplemented dividends with share buybacks, which typically have a positive effect on share prices and tend to attract lower taxes � in turn boosting shareholder returns.