Why is such a consistency in the retail supermarkets?
$Wal-Mart(WMT)$ fell sharply after releasing its Q3 earnings report on Thursday, despite beating expectations. Executives warned that consumer spending trends will slow during the upcoming key holiday shopping season, which is a very negative signal to investors.
In addition, $Macy's(M)$ saw a significant increase in its stock price after its earnings report on the same day, not only beating Q3 expectations but also improving operating efficiency, mainly due to permanent price cuts within the brand and improved freight expenses. Macy's provided favorable Q4 guidance and emphasized continued inventory management.
Interestingly, $Target(TGT)$ also released its earnings report the day before, with the market previously having low expectations for TGT, resulting in it exceeding expectations. Q3 showed strong cost management and improved operating efficiency, leading investors to believe that it has already "bottomed out".
Why do these retailers have different performance and executive expectations?
First, while CPI has indeed fallen, different projects have different impacts on corresponding advantageous retail categories. For example, WMT is important for daily consumer goods such as food, which has seen relatively high prices in recent months and has further trended towards historical levels, so they may believe that consumer expectations will not strengthen due to the holiday season and WMT does not plan to offer discounts and promotions. On the other hand, Macy's is more important for optional consumer goods, which can be observed in the CPI classification with a clear decline, and the holiday season has a greater impact on them.
Second, inventory management has an impact. Since TGT and M have had inventory backlog issues in previous quarters' earnings reports to varying degrees, secondary market investors have already "punished" them early, especially TGT, which fell in the last quarter's earnings report. This is to some extent a "correction of the market's weak view of them". WMT has always performed strongly due to its excellent inventory management, so the secondary market has given it a relatively high premium, and this time it is more of a correction after "lowering expectations". Below is a comparison of same-store sales, revenue growth rate, gross profit margin, and inventory growth rate for the three companies.
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Undervalued. Comparison with Walmart and BJ’s quarterly results shows Target should return to $150-160 range without difficulty. A core equity in the consumer defense category that checks all the boxes.
this heavily feels like a bear market rallye: stocks reporting earnings wildly swung around (see TGT / WMT e.g.)
But I feel WMT looking good for upside, Walmart looking good 160+ incoming , bull need to take over here.
QQQ SPY wendys and WMT showing some serious cracks in the economy
See new insider selling. They know. m is a sham.