By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
Consumer spending is back and better than ever.
A healthy U.S. economy, rebounding consumer confidence, record low unemployment is benefiting some major retailers.
Target CEO, Brian Cornell says the company saw unprecedented growth in same-store sales and foot traffic during the second quarter of 2018. The retailer’s shares are surging after reporting fiscal second-quarter results that beat on earnings, revenue, and comparable store sales.
“There’s no doubt that, like others, we’re currently benefiting from a very strong consumer environment – perhaps the strongest I’ve seen in my career,” Cornell told analysts.
As many investors have written off in-store retailers in the era of Amazon, Target sees a huge jump in foot traffic. Digital sales have also soared, skyrocketing 40 percent during the second quarter after adding more items to its website and more delivery options for online orders.
Target is also focused after reinvesting $7 billion in its business at the start of last year laying out a strategy to expanding its e-commerce platforms, improving in-house brands, opening new small-format stores, and remodeling existing locations. Cornell reports these investments are paying off with Target reporting its strongest same-store sales growth in 13 years.
Other retail giants are boasting winner numbers.
Walmart reported earnings last week that also topped analysts’ expectations, driving Walmart shares up more than 9 percent in one day. Kohl’s and TJ Maxx owner TJX said more shoppers were visiting their store’s spending on everything from jeans and handbags to home goods.
Companies seem to be managing inventories well, and digital investments are paying off.
“I think what you’re seeing right now from a macro basis is well-run retailers with strong balance sheets that generate cash … are winning right now,” Target’s Cornell told analysts and investors.
“And there’s obviously others right now that can’t afford to invest in their store experience, or build capabilities or drive differentiation. And they’re giving up share. So there’s clearly winners and losers. We certainly think we’re migrating to the winner’s column.”
- 5 Sep, 2018
- Josh Smith