2018 KA-CHING!
Target’s boffo results add to sector euphoria
You go, shoppers! Target on Wednesday joined a growing list of brickand-mortar retailers reporting flush second-quarter results — on the backs of a rejuvenated consumer base.
The cheap chic retailer’s same-store sales spiked 6.5 percent compared with the year-earlier period — its biggest such gain in about 13 years.
Strong shopper traffic in its aisles as well as solid e-commerce growth sparked the gain, the chain said.
The sales increases echoed rivals’ results during the past week, and investors cheered the news, pushing the stock higher.
Shares rose 3.2 percent, to $85.94, or 27 percent year to date, which amounts to a higher rate than either Apple or Google parent Alphabet.
“Target hit the bull’s-eye in Q2, with improvement across virtually every meaningful measure,” Moody’s retail analyst Charlie O’Shea told Reuters.
Target joins Walmart, TJX, Kohl’s, Macy’s and Nordstrom in basking in the glow of a suddenly free-spending consumer.
Executives at several of the retail giants attributed the healthy uptick in revenue to a lower unemployment rate, fresh tax cuts and rising wages.
“There’s no doubt that, like others, we’re currently benefiting from a very strong consumer environment — perhaps the strongest I’ve seen in my career,” Target Chief Executive Brian Cornell told analysts.
The company’s online sales surged 41 percent, but Cornell said on any given day 90 percent of retail sales still take place at physical stores.
The collapse of Toys ‘R’ US also has left a vacuum that Walmart and Target have lately swooped in to fill. Target, for its part, is pouring $7 billion into updating its stores.
TJX, the parent company of TJ Maxx and Marshalls, re- ported foot traffic was up for the 16th consecutive period, driving a 7-percent samestore-sales increase, and that the current quarter was “off to a strong start.”
“Target is clearly capitalizing on a stronger consumer backdrop, seasonal drivers and market share opportunities,” said Credit Suisse analyst Seth Sigman in a letter to investors.
The analyst asserted the results were “well ahead of industry trends.”
In order to try and stay competitive with online retail behemoth Amazon, Target purchased grocery delivery startup Shipt for $550 million in December of last year. Shipt’s impact was fully felt on March 29, and allows the retail giant to offer sameday shipping.
What’s more, its massive logistics investment has bulked up its e-commerce presence.
The retail player also is adding its own private label brands, such as Heyday in June, which offers more than 150 different tech products ranging from headphones to iPhone cases.
“There are going to be billions of dollars of retail market share up for grabs, and we’re going to position ourselves to take more than our fair share of that,” said Cornell.