Dow Jones retail heavyweight Walmart reported a surprise earnings gain early Thursday and raised full-year targets. Target on Wednesday posted mixed results and slashed its outlook. TJX topped forecasts, also on Wednesday.
Walmart stock turned lower after initially climbing in a buy zone. Target shares edged up, after closing firmly higher Wednesday.
Walmart Earnings
Walmart earnings rose 4% to $1.84 per share in fiscal Q2 2024. Revenue climbed 5.7% to $161.6 billion. Analysts expected a 3.4% earnings decline to $1.71 per share on revenue growth of 4.8%, to $160.22 billion.
Comparable sales excluding fuel climbed 5.5%, beating Wall Street forecasts of 4.1% growth. E-commerce sales for Walmart U.S. jumped 24%.
Walmart earnings growth slowed after accelerating the past three quarters leading up to the report.
For the third quarter, Walmart sees adjusted earnings between $1.45 and $1.50 per share on 3% net sales growth. Analysts polled by FactSet expect Q3 earnings of $1.49 per share on $157.22 billion in revenue.
The Dow Jones retailer also lifted its fiscal 2024 outlook. Walmart guided full-year adjusted earnings between $6.36 to $6.46 per share on 4% to 4.5% net sales growth. The outlook was ahead of analyst forecasts of $6.30 per share and in-line with revenue predictions of $637.93 billion. The company previously expected EPS of $6.10-$6.20 on 3.5% sales growth.
Walmart Stock
Walmart stock is trading in a buy zone for a cup-with-handle base. WMT stock slumped 2.3% to 155.67 Thursday after initially gaining 1% to 160.80 in premarket trade. Shares rose less than 0.1% to 159.26 Wednesday, and has a year-to-date gain of about 9.8%.
Evercore ISI added Walmart to its "Tactical Outperform List" on Monday. Greg Melich expected solid traffic, market-share capture and margin recovery to drive a strong quarter.
Target
Target earnings skyrocketed nearly 362% to $1.80 per share for the second quarter. That marked a major turnaround after earnings fell for the past five quarters. Sales fell for the first time in almost six years as total revenue declined 4.9% to $24.8 billion.
Analysts expected a 266% spike in Target earnings to $1.43 per share on a 3.3% sales dip to $25.19 billion.
Comparable sales declined 5.4%, worse than FactSet forecasts of a 3.7% decline.
CEO Brian Cornell said the results demonstrated the "resilience" of Target's business model as profitability improved despite softer-than-expected sales. He noted that Target's leaner inventory helped the company adjust to changing topline trends throughout the quarter.
In the earnings call, Cornell noted that retail theft and organized crime continues to weigh on the business. Stores saw a 120% increase in theft incidents involving violence or threats of violence during the first five months of 2023, according to the company.
Executives said that topline performance was impacted by the negative reactions to Pride and LGBTQ+ products as conservatives boycotted Target throughout June. "In this case, the reaction is a signal for us to pause, adapt and learn so that our future approach to these moments balances celebration, inclusivity and broad-based appeal," said Christina Hennington, chief growth officer.
Target Outlook
However, Target slashed its guidance based on recent sales trends. CFO Michael Fiddelke said the upcoming resumption of student loan repayments will "put additional pressure on the already-strained budgets of tens of millions of households."
The company expects a mid-single digit decline in comparable sales for the rest of the year. Target lowered its earnings outlook to range from $7 to $8 per share, compared to its prior range between $7.75 and $8.75 per share. FactSet analysts expect full-year earnings of $7.72 per share with a 1.7% dip in comparable sales.
For Q3, Target sees earnings between $1.20 and $1.60 per share on a mid-single digit comparable sales drop. The forecast is well below FactSet earnings predictions of $1.82 per share. Wall Street guides a 2.5% decline in comparable sales for the third quarter.
Target shares added 1% Thursday. TGT stock rallied as much as 9% Wednesday, then backtracked to a 3% gain. That took back most of Tuesday's 3.4% slump, which hit a three-year low. Shares are down around 12.7% so far this year through Thursday's close.
Shares rose a fraction early Thursday.
TJX
Also on Wednesday morning, TJX, the parent company behind T.J. Maxx, Marshalls and HomeGoods, beat more bullish expectations for its Q2 results.
TJX reported a 23% earnings increase to 85 cents per share while net sales rose 8% to $12.8 billion. Wall Street expected EPS of 77 cents on 5.2% sales growth to $12.45 billion.
Company-wide comparable sales climbed 6%, beating forecasts of 2.9% growth.
TJX averaged double-digit earnings growth the past two quarters.
TJX sees full-year earnings of $3.66 to $3.72 per share. The off-price retail giant sees adjusted earnings 10 cents lower than that guidance. Both came in above FactSet forecasts of $3.59 per share.
Based on the full-year outlook, TJX forecasts Q4 earnings of $1.10-$1.13 per share, compared to FactSet expectations of $1.08 per share. The company guided adjusted earnings to between $1 and $1.03, slightly below estimates of $1.09 per share.
TJX stock slipped 1.3% Thursday and closed 4.1% higher Wednesday. Shares have traded very tightly since mid-July, following a mid-June breakout from a cup-with-handle base.
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