What’s Going On Here?Retailer Target and Lowe’s were feeling awfully pleased with their shopping experiences after announcing better-than-expected second-quarter results on Wednesday. What Does This Mean?Sales at Target’s existing stores were 24% higher than the same time last year, compared to the 9% analysts had been predicting. That uptick was partly thanks to a 195% rise in revenue in the company’s ecommerce segment, which included a – pause for effect – 700% rise in curbside collection. The retailer’s quarterly profit jumped too – by an expectation-busting 80%.
Home improvement retailer Lowe’s was too busy admiring its own handiwork to notice: sales at its existing stores grew by a higher-than-expected 35% versus the same time last year, and its profit was up 70%. It grew its sales faster than nosy neighbor Home Depot yet again too. In the first quarter, investors might’ve put that gap down to a well-timed spring sale from Lowe’s. Now, though, it looks like it might be a more permanent fixture. Why Should I Care?For markets: Shop ‘til your stock doesn’t drop.
Target’s stock rose 12% on Wednesday – probably because it’s benefited from lockdown-enforced online shopping and stimulus check-enabled spending. And with school shopping season around the corner, the company’s likely to keep benefiting. Lowe’s share price, on the other hand, only rose 1%. That could be because investors – who might’ve seen Home Depot’s positive update as promising news for its rival – pushed up Lowe’s stock on Tuesday, meaning good news was already “priced in” to its stock.
The bigger picture: Zero sum game.
While Walmart, Target, Home Depot, and Lowe’s all did pretty well in the second quarter, off-price clothing retailer TJ Maxx (or TK Maxx in the UK) missed out. Its quarterly loss – partly driven by forced store closures – was worse than expected, and its shares fell 6%. Then again, it's a "discretionary" retailer, not an "essential" one like Walmart and Target – and as such wasn't allowed to stay open throughout the pandemic like they were. | 