Analysts and industry observers said the retailer’s results show that while U.S. consumers are restrained, they are not in recessionary mode.
Target raised its full-year profit forecast on Wednesday and reported its first quarterly comparable sales increase in more than a year, driven by discounts that attracted more shoppers to its stores. This represents an impact on its stock and therefore on the Cedear which is listed on the Buenos Aires market.
Shares of the Minneapolis-based retailer rose 16%, hitting a nearly four-month high of $167.40. The stock is on track for its best day in more than nine months after the chain said it expects profit of $9 to $9.70 per share in 2024, up from its previous forecast of $8.60 to $9.60.
Wall Street: the rise of Target
Target shares then moderated their gains, but are up 13%. In recent days, the green has extended to almost 20%.
Second-quarter comparable sales — meaning sales at online and brick-and-mortar stores open at least 12 months — rose 2% in the quarter ended Aug. 3, the first increase in more than a year. Analysts on average had forecast a 1.2% rise in comparable sales, according to LSEG.
Traffic was the main driver of all of its comparable sales gains, as markdowns on thousands of items proved a powerful magnet for shoppers who have been grappling with rapidly rising food prices and interest rates, the company said.
Analysts and industry observers said the retailer’s results show that while American consumers are restrained, they are not in recession mode. However, they also indicated that they are willing to wait for whoever offers the best discounts and are increasingly being driven by events and special occasions.
Other data that Target presented
To reverse more than a year of declining sales, Target cut prices on more than 5,000 popular items, including bread, soda, paper towels and pet food, this summer. In February, it introduced a new line of private-label staples called dealworthy, with most of the 400 items priced under $10. It also expanded its Good & Gather and Favorite Day brands by adding 125 new food products.
cedears
Target’s report and a hike in annual sales and profit forecasts from larger rival Walmart last week are a sign that U.S. consumer spending is strong ahead of expected interest rate cuts by the Federal Reserve in September.
US retail sales also rose more than expected in July, easing fears that the US economy was heading for a recession following signs of a weakening labour market.
Source: Ambito
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