The Retail Giant’s Win with Gloomy Forecasts
Following Home Depot’s grim forecast for the future, retail giant Target just released its fair share that may corroborate a worrying trend for the consumer. On Wednesday’s trading day, Target posted its earnings report for its fiscal first quarter. For the quarter, Target was able to beat Wall Street’s bottom-line expectations at $2.05 earnings per share versus the expected $1.76. This was, however, attributed to the measures taken to decrease costs, as sales year-over-year remained almost unchanged. For the quarter, it was noted that revenues were held up by new priorities on necessities, such as groceries and everyday essentials, as opposed to discretionary items. Unlike Home Depot, Target didn’t change its full-year outlook, with total earnings per share between $7.75 and $8.75. They did retain this current quarter’s sales will be lackluster, with a minor single-digit decrease in comparable sales.
Alongside the testaments from Target, the U.S. Commerce Department released retail sales figures that didn’t beat expectations. For April, retail sales did increase by 0.4%, however, this was well below the Dow Jones estimate of 0.8%. This figure did match the same month’s rise in the consumer price index, but on an annual basis, sales had only grown 1.6% relative to the 4.9% of the CPI. Despite the miss in expectations, April’s demand was the first positive increase since the holiday-fueled January, and several analysts believe it may show signs of an upside. On the contrary, with the total U.S. debt reaching $17 trillion and further interest rate hikes not out of the question, it is plausible that the American consumer will continue to have a tough road ahead of them.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.