All discounters are not created equal. Though Target
Sometimes being the coolest kid on the block just doesn't pay as much as being the biggest.
Target's sales for the quarter ended Feb. 1 rose 6.4% to $14.061 billion. Comps declined by 2.2%. Wal-Mart, on the other hand, booked sales of $71 billion for the fourth quarter, an increase of 10.7%, and managed a comps gain of 2.7%. With incomes tight and war looming, it appears shoppers opted for "Everyday Low Prices" this season.
On the earnings side, there's even greater disparity. Target netted $688 million, ahead of the previous quarter's $658 million by 4.4%. It hit the analysts' bull's-eye with earnings per share of $0.75. Wal-Mart's earnings, though, ballooned 15.5% to $2.5 billion.
An area of concern for Target is its enormous growth in accounts receivable. They shot up at year's end by 45% to $5.6 billion. Sales for the fiscal year only improved 10.3%. That's a scary deviation.
Its credit operations may end up biting the company, much like they bitSears
Wal-Mart doesn't have this problem. With quarterly sales of $71 billion and annual sales of $244.5 billion, its receivables are a mere $2.1 billion, 5% higher than last year.
Hopefully, Target will get its credit problems in order quickly. For it to compete with Wal-Mart, it's going to have to.