Investors looking for clues on the struggling U.S. retail landscape should tune in to Target Corp.'s (NYSE: TGT) earnings when the company reports today before the bell.
April marked the slowest growth in retail sales of the year, growing at a morbidly slow 0.1% compared to 0.7% in March. The major categories that led to the decline were building materials, clothing, and department store sales.
Economists cite the drop off from record warm weather during the previous three months as a catalyst for the sluggish growth.
However, it seems like Washington is taking the easy way out by blaming the weather and possibly an early Easter for the decline.
What seems to be more of an issue here is the fact that the consumer environment remains a very tough arena to sustain growth in right now.
That sets the stage for Target.
When Target reports its earnings this morning it will give investors a better idea of where consumer spending is headed following a slow spring.
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Target's (NYSE: TGT) Earnings Follow Weak Reports
Target Corp. (NYSE: TGT) Has Dethroned Wal-Mart as the Discount King
Target Corp. (NYSE: TGT) the second-largest U.S. discount retailer, may have found a strategy to oust Wal-Mart Stores Inc. (NYSE: WMT) as the No. 1 discount-shopping source.
For years retailers have tried to get an edge on Wal-Mart, and through added business segments, new discounts and a streamlined store focus, Target may have done just that.
Even with a tough outlook for U.S. retail spending, the company is expected to do well for the rest of the year.
Burt Flickinger, managing director of Strategic Resource Group, said Target's been delivering all the right moves a retail company should make when the economy falters.
"Target's strategic plan is much stronger than Wal-Mart," Flickinger said. "Wal-Mart is going the wrong way."
It also opened a grocery section in most stores to become more of a one-stop shopping experience, like many Wal-Mart locations. The grocery business boosted profitability and only slimmed margins to 31.6% from 32%.
Target's focus on consumable items is part of a strategy to generate more same-store sales in a few geographic regions, compared to geographically diversified Wal-Mart. The business shift has paid off.
For years retailers have tried to get an edge on Wal-Mart, and through added business segments, new discounts and a streamlined store focus, Target may have done just that.
Even with a tough outlook for U.S. retail spending, the company is expected to do well for the rest of the year.
Burt Flickinger, managing director of Strategic Resource Group, said Target's been delivering all the right moves a retail company should make when the economy falters.
"Target's strategic plan is much stronger than Wal-Mart," Flickinger said. "Wal-Mart is going the wrong way."
Target Corp.: Shoppers' Delight
To compensate for a stagnant economy, Target slowed store openings and gave added incentives through discounts. The efforts helped boost same-store sales 3.9% last quarter, the biggest boost since 2007.It also opened a grocery section in most stores to become more of a one-stop shopping experience, like many Wal-Mart locations. The grocery business boosted profitability and only slimmed margins to 31.6% from 32%.
Target's focus on consumable items is part of a strategy to generate more same-store sales in a few geographic regions, compared to geographically diversified Wal-Mart. The business shift has paid off.
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