Updated Aug 14 at 11:07am ET.
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US retail sales fell by 0.6 percent in July, a much sharper drop than the small gain analysts had expected. This is the biggest monthly decline in over a year, driven largely by people spending less at online stores and car dealerships.
For a retailer like Target, this is a signal that the average shopper is becoming more cautious. Because Target relies more on discretionary items like clothing and home decor than rivals like Walmart, a general pullback in consumer spending often hits its profit margins harder. If this trend continues into the back-to-school and holiday seasons, it could make it difficult for the company to hit its sales growth targets for the year.
Source: Bloomberg Markets and Finance
Target has hired Chandhu Nair, a former executive at Lowe's, to serve as its first chief artificial intelligence officer. He will start in late August with a mandate to coordinate how the company uses AI across its operations. While hiring a dedicated leader for AI is a common move for big retailers today, the real test will be whether it leads to better inventory management or more personalized marketing. Target is betting that better technology can help it predict what shoppers want and reduce the amount of unsold goods that it eventually has to mark down.
Oil prices jumped following news that Iran may restrict traffic in the Strait of Hormuz, a critical waterway for global energy supplies. For a retailer like Target, higher oil prices are a double blow. They increase the cost of shipping goods to stores and, more importantly, leave shoppers with less money to spend on non-essential items like clothes and home decor after they fill up their gas tanks.
Source: CNBC
Evercore ISI raised its price target for Target to $150, up from $135. This move suggests growing confidence that the retailer is successfully managing its inventory and finding ways to attract shoppers even as they remain cautious about spending. The new target is roughly 2 percent above the current stock price.
Source: Evercore ISI
Wolfe Research set a price target of $169 for Target, which is significantly higher than the average analyst target of $140. This suggests a view that the company's efforts to use its stores as digital fulfillment hubs will pay off more than others expect. If the stock reaches this level, it would represent a gain of about 15 percent from where it trades today.
Source: Wolfe Research
Analysts recently raised their price targets for Target in a flurry of activity leading up to the company's upcoming earnings report. About half of the 60 analysts rate the stock a buy, but the average target is 6% below today's price.
Target has beaten analyst profit targets in six of the last eight quarters. Management generally sets a bar they can clear, though high costs for things like inventory and theft have made results choppy.
| Expectation | |
|---|---|
| EPS | $2.33 |
| Revenue | $26.12B |
