What's in store for Target
Whichever you choose, the second-quarter performance was still pretty decent. Revenue was up mmore than 11% both in total and for the retail operations, and comp-store sales rose 4.6% for the quarter, though the pace there appears to be slowing. Margins also continue in the right direction and the company delivered mid-teen growth in earnings per share.
Not everything looked great, though. Inventory management metrics haven't been going in the right direction for a little while now and this quarter didn't seem to be any better. And while Target may have a better image with the shopping public than Wal-Mart, operating efficiency and in-stock position does ultimately matter at some point.
So what about this upcoming economic slowdown? After all, sooner or later the economy will slow down. The theory I've heard from quite a few people is that it will be good for companies like Wal-Mart and Target -- people accustomed to shopping at Abercrombie & Fitch
Maybe. Maybe not.
I see it just as likely that people will scrimp and save where they can to continue shopping where they're accustomed to shopping. Moreover, what about less affluent customers (who already may shop there) being forced to cut back? Or what about those shoppers turning to deep discount dollar stores for their needs? Fact is, at least as I see it, if you're a big retailer, you're going to suffer one way or another when the economy slows -- and whether you suffer incrementally less than other companies may not make much difference in the stock price.
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Wal-Mart is a Motley Fool Inside Value selection.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).