Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Target's Quarter Was No Surprise

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

You'd think these would be great days for discounters, and in some ways, they are. However, Target (NYSE: TGT  ) has failed to stir up customer traffic, so maybe its historical "cheap chic" reputation has struck many shoppers as too chic and not cheap enough.

First-quarter net income at Target fell 13%, to $522 million, or $0.69 per share. Revenue increased a scant 0.2%, to $14.83 billion, while same-store sales decreased by 3.7%.

As has been the case for many retailers recently, investors seem to be happy with the tidings. The quarterly results beat analysts' earnings expectations by a long shot -- $0.10 per share. Target even met expectations on the top line.

The quarter reflects a pretty common trend in retail at the moment -- flagging profitability and a failure to grow traffic and revenue. Of course, given the ugly consumer spending environment, this result can be expected for many retailers.

Things are tough all over. Although this is Target's seventh consecutive quarter of profit decline, Wal-Mart Stores (NYSE: WMT  ) recorded only flat net income in its most recent quarter, with sales dipping 0.6%, in part due to the strong dollar. Still, Wal-Mart has been gaining market share, as nervous consumers have been attracted to its low-priced products. Another rival, BJ's Wholesale (NYSE: BJ  ) , reported an impressive 41% increase in quarterly earnings. At this time, Target doesn't look terribly alluring by comparison.

Not only has Target had a surprisingly hard time in the current environment, but Bill Ackman of Pershing Square Capital Management has been pressing for changes at the retailer. Ackman has agitated for changes at companies such as Borders Group (NYSE: BGP  ) , Wendy's/Arby's (NYSE: WEN  ) , and McDonald's (NYSE: MCD  ) . Such activism also infuses a bit of uncertainty into the retailer's future. 

I've long been a fan of Target's business, but given these considerations, a wait-and-see approach is probably better on this stock at the moment. Given that the company wasn't growing earnings even before the full-blown recession kicked in, investors would do well to not park their money in front of Target until it can show some earnings traction.

Shop around for some related Foolishness:

Wal-Mart is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 903879, ~/Articles/ArticleHandler.aspx, 10/20/2016 4:09:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,185.12 -17.50 -0.10%
S&P 500 2,142.87 -1.42 -0.07%
NASD 5,246.96 0.54 0.01%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 3:53 PM
TGT $67.72 Up +0.19 +0.27%
Target CAPS Rating: ***
BGPIQ.DL $0.00 Down +0.00 +0.00%
Borders Group CAPS Rating: *
BJ.DL $0.00 Down +0.00 +0.00%
BJ's Wholesale Clu… CAPS Rating: ****
MCD $110.68 Down -0.58 -0.52%
McDonald's CAPS Rating: ***
WEN $10.87 Down -0.12 -1.09%
Wendy's CAPS Rating: ***
WMT $68.80 Down -0.10 -0.14%
Wal-Mart Stores CAPS Rating: ***