Shares of Target (Minneapolis) tumbled to a 52-week low on Wednesday (Nov. 20), a day after Walmart (Bentonville, Ark.) shares soared to an all-time high, as the rival retailers’ latest earnings reports again underscored how their performances have diverged, CNBC reports.
Target posted its biggest earnings miss in two years and cut its forecast, pointing a “deceleration in discretionary demand” and blamed higher costs from rushing to move inventory ahead of the short-lived port strike in October.
In its report, Walmart hiked its full-year forecast, saying it’s gaining upper-income shoppers and seeing better trends for sales of merchandise outside of the grocery department, even as consumers look for value.
Target’s disappointing results reflect the company’s performance rather than the health of consumers, said Michael Baker, a retail analyst at D.A. Davidson. “It’s as simple as this: They are losing share,” Baker said. “They are losing share to Walmart, Amazon and Costco.”
The sharp differences between the two big-box retailers — and how their businesses are executing in the same economic backdrop — illustrate where consumers are willing to spend money and where they are pulling back as customers remain selective about spending, CNBC said. That sharp divergence of the winners and losers in the industry could become even starker as retailers enter their most crucial sales season of the year.
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