The retail earnings season started with a bang for Target (TGT) as the stock jumped more than 10% on Wednesday.
The move higher was triggered by this morning’s earnings results, which were $0.39 better than the market was looking for on earnings per share. The company's revenue for the last quarter also beat analysts’ expectations slightly, showing 2.7% growth on a year-over-year basis.
Targets numbers show signs that the consumer is still strong as they spent more on discretionary items in the last quarter. Forward-looking guidance from the company expects to see fiscal year 2025 higher on an earnings per share basis.
The stronger than expected results and outlook have investors changing their tune on many retail stores including TJX, Walmart and other mid-market companies.
Today's rally moves target back above its 200-day moving average, a trend line that the stock has been fighting to get above for the last week. Trading was on heavy volume.
Investors should expect to see the stock pare some of today’s gains as shares have extended themselves into a technically overbought reading from their RSI.
Any pullback is likely to be met with more long-term buying as the stock is shifting into a long-term bullish trend that should target $190.
JD.com (JD) erased this week’s earnings gains today as the stock closed down 4.2%.
Shares of the Chinese retail company saw their heaviest ever trading volume for the day as investors reacted to the news that Walmart had closed their position in JD.com.
Walmart confirmed the sale of nearly $4 billion in JD.com stock in a move to focus on the development of their own market in China. Walmart also confirmed their intent to continue working with JD.com which carries Walmart goods and products on their website.
Just last week JD.com reported strong earnings results that sent the stock on a 15% rally, moving shares back above their 50- and 200-day moving averages.
Today’s selling sent the stock back to its critical 200-day moving average which acted as support for the day.
Investors need to be aware that the $25 price level should be considered an extremely important hold for the stock. JD.com shares’ 50-day moving average remains in a bearish trend and a break below $25 will cause systematic selling to increase with a target move of -20%.
The stock experienced a similar move the last time shares breached $25 in January this year.
Rounding up the retail activity today are shares of Macy’s (M) which dropped more than 12% on Wednesday.
The traditional “anchor” styled department store reported weaker than expected earnings as the company struggles through a transition.
The company recently rolled out a “Bold New Chapter” in February geared towards updating the stores approach to return it to enterprise growth. The model planned to strengthen Macy’s nameplate, accelerate luxury growth and simplify and modernize the company’s end-to-end operations.
Last month Macy’s management rejected a takeover bid from Arkhouse Management and Brigade Capital Management. The $6.9 billion ($24 per share) offer was rejected unanimously by Macy’s Board as the company saw the deal as a move to acquire Macy’s real estate portfolio, not revive its retail operations. Macy’s real estate is valued between $5 and $14 billion, a wide range.
Today’s price drop digs the stock back into technical bear market territory with its 20-month moving average sitting at $16.60.
$15 is the next line in the sand in terms of technical support for Macy’s with a break of that price targeting another possible 30% in declines to a target price of $10, a price not seen since 2020.
