For many retailers, December verified what everybody expected in consumer spending. Look no further than the comps at Ann Taylor
But then you have discount giant Wal-Mart
I've never been particularly bullish on Wal-Mart, but I do give it credit for having performed as well as it has over the past months, especially considering the current climate. December same-store sales increased by 2.7%, if you include fuel revenues, compared with a 2.6% increase this time last year. Without fuel, Wal-Mart's comps increased by 2.4%. Total sales for the period increased 8.4% to $46.6 billion.
Wal-Mart changed its slogan in September to "Save money. Live better." You've got to wonder whether the company's many moves to establish a better public image are paying off or whether it's all just coincidence. Or whether, maybe, consumers are just broke and heading for the cheapest retailer they can think of.
After all, rival Target
Target didn't have much good news to share on the guidance front, either. It said January comps will be in the range of down 1% to up 1% -- not very exciting, no matter how you cut it. Target's also telling investors to expect a lackluster fourth quarter that won't live up to last year's performance. Ouch.
But despite the less-than-exciting news, and even though Wal-Mart has outdone it again in December, Target did see its stock rise today -- after news, no less, that CEO Bob Ulrich will resign in May after he turns 65. Ulrich is widely credited for Target's transformation to a discounter that made bargain hunting fun (and even chic).
Clearly, Target shareholders don't see this as the end of the world. After all, President Gregg Steinhafel will take over the reins when Ulrich steps down, and Steinhafel has been with Target since 1979. A Fortune article says he's a skilled merchandiser and a well-liked leader, so it's likely the retailer's still in capable hands.
The low-price halo
I'm a bigger fan of Target than I am of Wal-Mart when it comes to the long term. I'm partial to warehouse retailer Costco
So although I can't deny Wal-Mart's been making up for lost time lately and capitalizing on consumers' desire -- or necessity -- to be frugal, the recent weakness at Target should present investors with good opportunities to get in. The company does, though, need to get its traffic back up.
Meanwhile, the whole Wal-Mart vs. Target idea isn't as significant as it was in better times. With consumers now on tighter budgets, it makes sense that stocks at the major discount retailers are logical places to put investing dollars, whether you're a fan of Wal-Mart, Target, or Costco.
After all, even when consumers are in dire straits, they still need food and staples, and these retailers are happy to oblige. As far as retail niches go, these three discount names are safe havens.