Target, Kohl's and TJX are hot, but Wall Street is worried about the holidays

America's top retailers reported strong sales last quarter, but Wall Street's worried their plans to win the...

Posted: Nov 21, 2018 2:35 AM
Updated: Nov 21, 2018 2:35 AM

America's top retailers reported strong sales last quarter, but Wall Street's worried their plans to win the holiday shopping season would be costly.

Target kicked off a busy earnings day across retail with sales and profit margins that fell short of investors' high expectations.

Companies

Target Corp

Business and industry sectors

Business, economy and trade

Retail and wholesale trade

Walmart

Banking, finance and investments

Financial markets and investing

Wall Street

Company activities and management

Sales and selling

Sales figures

Company earnings

Financial performance and reports

Financial results

Consumer products

Holiday retail

Seasonal retail

Securities trading

Stock markets

Kohl's Corp

Despite a robust 5.1% sales gain at stores open for at least a year and 49% digital growth, Wall Street punished Target for its profit margin drop-off. Target's costs are rising as it races to ship more orders online to compete with Amazon. Shares of Target (TGT) fell as much as 13%.

Target expects same-store sales during the holiday season to increase 5% as it cuts prices and invests in convenient new ways to shop. The company is offering free two-day shipping on hundreds of thousands of items to win customers during the holidays, with no minimum purchase required. It has also remodeled stores, added new smaller stores in cities, and rolled out drive-up at 1,000 stores and in-store pickups from online orders.

"I still see a very positive story here for brick-and-mortar retailers that are not anchored to malls," said eMarketer analyst Andrew Lipsman. "Somewhat moderated holiday outlooks — combined with a much more uncertain 2019 environment — are likely behind the near-term sell-off."

Kohl's (KSS) also reported a positive quarter Tuesday, but a similar story played out on Wall Street. Kohl's, which has found creative ways to reformat its stores and drive traffic, tumbled 11%. Investors faulted the company for guidance that came in on the lower end of some analysts' expectations.

Discount powerhouse TJX Companies (TJX), parent of TJMaxx, Marshalls and HomeGoods, reported a 7% rise in same-store sales last quarter as consumers flooded in to find bargains. But TJX and rival Ross Stores (ROST) fell on TJ's sluggish guidance.

Other retailers have been unable to take advantage of the healthy environment. JCPenney (JCP) said last week that same-store sales fell 5.4% last quarter.

"We are over-assorted and heavy on inventory," new CEO Jill Soltau said last week about JCPenney's stores.

Victoria's Secret (LB) and Barnes & Noble (BKS) are also under fire. Victoria's Secret cut its divided and same-store sales dropped 6% last quarter as the brand loses relevance with many women. Barnes & Noble's same-store sales fell 1.4% last quarter.

One company bucking the trend was Best Buy (BBY), which said same-store sales rose 4.3% last quarter, its sixth straight quarter above 4%. The company raised its forecast in anticipation of consumers buying up TVs and electronics this holiday. The stock rose nearly 4%.

"People are going to want to go into Best Buy this holiday season to get some advice, and they'll end up picking up some gifts while they're there," Lipsman said.

Pressure to perform

Investors are stepping up pressure on companies to take advantage of a healthy economy. Wages are rising, unemployment is low, and retail spending continues to rise.

Longtime rivals Toys 'R' Us and Bon-Ton have folded and Sears filed for bankruptcy. That's raising the stakes for retailers to pick up market share left up for grabs.

"We continue to see a very healthy retail environment," Target CEO Brian Cornell told reporters on a call Tuesday. "You saw some of that in our third quarter results."

Walmart CFO Brett Biggs sounded a similar message last week: "Certainly this kind of environment, everybody likes," he said on a reporter call.

Last week, Walmart (WMT) reported 3.4% quarterly growth at stores and boosted its guidance for the holidays, but investors punished the stock for a profit margin miss from fulfilling online orders.

Walmart is trying to ramp up the number of items it sells online while also finding a way to make money off them. Walmart mainly offers highly popular items right now, but those sales carry lower profit margins. "The process takes time, and we're making progress," Walmart CEO Doug McMillon said.

West Lafayette
Overcast
65° wxIcon
Hi: 68° Lo: 45°
Feels Like: 65°
Kokomo
Overcast
60° wxIcon
Hi: 64° Lo: 42°
Feels Like: 60°
Rensselaer
Broken Clouds
64° wxIcon
Hi: 66° Lo: 42°
Feels Like: 64°
Fowler
Broken Clouds
64° wxIcon
Hi: 64° Lo: 43°
Feels Like: 64°
Williamsport
Overcast
66° wxIcon
Hi: 66° Lo: 44°
Feels Like: 66°
Crawfordsville
Broken Clouds
67° wxIcon
Hi: 67° Lo: 43°
Feels Like: 67°
Frankfort
Overcast
65° wxIcon
Hi: 66° Lo: 42°
Feels Like: 65°
Delphi
Broken Clouds
65° wxIcon
Hi: 67° Lo: 43°
Feels Like: 65°
Monticello
Broken Clouds
65° wxIcon
Hi: 63° Lo: 44°
Feels Like: 65°
Logansport
Scattered Clouds
63° wxIcon
Hi: 64° Lo: 41°
Feels Like: 63°
Some more scattered rain with windy & cooler conditions.
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 119066

Reported Deaths: 3612
CountyConfirmedDeaths
Marion21563768
Lake10745324
Elkhart6734112
St. Joseph6679115
Allen6364205
Hamilton4965109
Vanderburgh384231
Hendricks2779124
Monroe267137
Tippecanoe259013
Johnson2362125
Clark226757
Porter222447
Delaware201162
Cass19589
Vigo187928
Madison171475
LaPorte151941
Warrick140743
Floyd140464
Howard133964
Kosciusko127117
Bartholomew119357
Marshall102124
Dubois100919
Boone99746
Grant96636
Hancock94843
Noble92932
Henry82226
Jackson77610
Wayne77314
Morgan73940
Shelby68329
Daviess68129
Dearborn67928
LaGrange64711
Clinton63414
Harrison59824
Putnam59011
Gibson5455
Knox5379
Lawrence51829
Montgomery51321
DeKalb49111
White48814
Decatur46139
Miami4394
Greene42936
Fayette42314
Jasper4032
Steuben3977
Scott39311
Posey3541
Sullivan33812
Jennings31712
Franklin31525
Clay3105
Ripley3108
Orange28724
Whitley2876
Carroll28013
Adams2773
Wabash2758
Starke2737
Washington2702
Wells2694
Spencer2683
Jefferson2523
Huntington2503
Fulton2462
Tipton22922
Randolph2238
Perry22213
Jay1920
Newton17411
Owen1711
Martin1690
Pike1691
Rush1584
Vermillion1320
Fountain1302
Blackford1223
Pulaski1141
Crawford1100
Parke1072
Brown1033
Benton860
Ohio797
Union790
Switzerland690
Warren411
Unassigned0227

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events