Macy's shares (M – Free Report) dropped 18% on Thursday after the department store giant lowered its annual earnings forecast due to lower than expected holiday sales. On the other hand, TARGET (TGT – Free Report) has recorded impressive growth in comparable sales during the vital holiday shopping period of November and December, which shows that its innovations to fight against the effects of price rises in the US and US dollars. Amazon's encroachment (AMZN – Free Report) have borne fruit.
Quick Macy Overview
Macy's downgraded its earnings guidance for the full year after its same-store sales increased about 1% during the crucial holiday shopping period. General Manager Jeff Gennette said in a statement that the retailer had experienced strong sales growth during the Thanksgiving shopping period. After that, however, sales dropped until Christmas week. At the same time, Kohl's (KSS – Free Report) saw its holiday product sales rise from 6.9% in one year to 1.2% in 2018.
Macy's shares fell by more than 18% during morning trading, while KSS's shares fell by 7%. These announcements, reduced at least from last year, also contributed to the decline in retailer shares, including Walmart (WMT-Free Report), Gap (GPS-Free Report) and Nordstrom (JWN-Free Report) . Target also saw its price drop, as did the entire retail sector, despite the fact that TGT posted impressive sales results.
Target of holiday purchases
Target's comparable sales jumped 5.7% between November and December. This growth is in addition to the 3.4% recorded last year. The increase in traffic primarily contributed to retail store store sales growth, as well as a slight increase in the average ticket price.
Target's top five merchandise categories developed during the vital phase of retail purchases. The company's Drive Up and Pickup Store services grew by 60% over the previous year. In addition, digital compositions soared 29%, "driven entirely by the growth of digital sales completed in-store," according to a company statement.
Target expects to see its digital sales climb by more than 25% for the fifth year in a row, as its retail offerings for the new age continue to grow. TGT has reorganized its supply chain, its digital and pricing strategies and introduced same-day delivery to many sites, which has been made possible through its acquisition of the Shipt grocery delivery company. .
Target has also worked on the restructuring of stores and the opening of small towns in urban areas and university towns. "Given our outlook for the fourth quarter, we are poised to achieve the strongest growth in Target's comparable sales since 2005, market share gains in all of our major merchandising categories, and growth in two digits of adjusted EPS, "said Chief Executive Brian Cornell. in prepared remarks.
"By 2019, we plan to build on this momentum by further developing our execution capabilities and achieving profitable growth throughout the year."
Target has reaffirmed its estimate of fourth quarter comparable business growth of about 5%, which is expected to reach about 75.57 billion dollars, and maintained its adjusted profit target for the year. whole of the exercise ranging from 5.30 to 5.50 dollars per share. Based on our current Zacks consensus estimate, Target's fourth quarter adjusted earnings should jump 10.2% to $ 1.51 per share. At the same time, the company's earnings are expected to rise 14.4% to $ 5.39 per share.
At the top of the income statement, TGT's quarterly revenues are expected to grow 1.6% to $ 23.13 billion. But this estimate may change based on Target's recent results on holiday purchases.
Target is currently ranked at Zacks 3 (pending), mainly due to its recent mixed profit review activity. TGT offers an "A" rating for Value and Momentum and a "B" rating for Growth in our Style Scores system. Investors should also remember that, in addition to its positive digital growth and modern retail initiatives, Target is a dividend payer that has just declared a quarterly dividend of $ 0.64 per common share.
The Minneapolis-based company is also currently trading at 12.6 times the 12-month Zacks Consensus Consensus EPS consensus, which is a significant discount from its industry average of 22.9 times and at 15.6 percent. The S & P target is also trading well below its five-year high of 20.1x and its five-year median of 14.4x. Therefore, we can say that the TGT shares have a relatively solid value for the moment.
Target stocks slid 3.80% to $ 67.62 per share on Thursday morning. This marks a drop of about 25% from its peak of $ 90.39 per share, in 52 weeks, and could constitute a solid buying opportunity.
Overall, the target stock could be an element to be taken into account at the moment if investors wish to be present in the retail trade. But TGT stocks have been quite turbulent over the past five years, up just 10.5%, well below the 46% jump in the S & P 500.
Looking for stocks with a rising rise?
Zacks has just released a special report on the burgeoning investment opportunities of legal marijuana.
Under the impetus of new referendums and new legislation, this industry is expected to grow from $ 6.7 billion to $ 20.2 billion in 2021. The first investors risked killing, but you must be ready to act and know where to look.
See the pot jobs that we target >>