WMT Sep 2024 80.000 call

Target earnings: What you need to know

Target (TGT) continues to slip, while Walmart (WMT) continues to strengthen. This Wednesday, May 22nd, Target debuted a less-than-stellar first quarter earnings report, Yahoo Finance's Brooke DiPalma explains: "It's really the tale of two retailers...Target falling down roughly 3.7%. Just last week, we saw same-store sales from Walmart impress the Street with an upside of 3.8%." Target's higher price points and smaller grocery departments have led some budget-conscious shoppers to turn away from the red-and-white retail giant, finding their dollar stretches further when shopping at Walmart. Yahoo Finance's Brian Sozzi reiterates: "Everywhere you look in this Target quarter, it stunk from top to bottom.... They noted that inflation is starting to slow, but they are not seeing a corresponding improvement in sales." Inflation appears to be a key catalyst for Target's struggling sales. In response to this continued sales drop, the company announced price cuts to around 5,000 of their products, with more price cuts coming over the summer. D.A. Davidson Managing Director Michael Baker sees this as a bullish move, "the key right now is for them to get customers in the door, and win back some traffic and win back some market share." So although Target may be down, they certainly are not out. Consumers may not have turned on Target, but they may, simply, not be able to afford it. Former Toys"R"US CEO Jerry Storch states, Target "has made its name selling nice-to-have fun products. That is not what the consumer is buying right now." Despite these current struggles, Target has proven itself as a quality company with "a great deal of consumer brand equity. People still love shopping there, so I think they have a lot to work with. So I'm not counting them out, but it's just going to take a while," he adds. This post was written by Noah Chadwick