The last group of companies to report the results for the first quarter this season were large US retailers and the results were mostly bleak. Major department stores such as (NYSE :), (NYSE 🙂 and (NYSE 🙂 all reported dismal results and underlined the concerns that they were not keeping up with the changing taste and buying habits of American consumers.
Still, not all retail results were ugly. There were a few winners who have demonstrated that they can successfully compete online with Amazon (NASDAQ :), while also finding the right mix of products and services to ensure that shoppers stay in their physical stores.
Now that all figures have been received, here is a closer look at three retailers who have managed to defy the downtrend of the sector:
1. Purpose: Revamp Pay Off
Target (NYSE 🙂 yielded another one when it reported its last earnings results on May 22. Shares, which closed at $ 80.77 from Tuesday, rose 7.8% in response to the news after the release.
The discount retailer earned $ 1.53 per share for the first quarter of 2019, while sales were $ 17.6 billion, both exceeding expectations.
However, the number that probably surprised investors the most was a 4.8% increase in quarterly revenue growth in the same store, which exceeded the forecasts by 4.2%. This meant the eighth consecutive quarter that the sales of identical stores expanded, a certain measure that more customers are shopping in the stores of Target where they continue to spend more money
Another promising signal: the e-commerce sales of Target rose 42% compared to the same quarter a year earlier. Purchases that now start online represent 7.1% of Target's total transactions, an increase of 5.2% a year ago, reassuring investors that the digital market-oriented revenue growth strategy of the retailer in Minneapolis is succeeding.
"The performance of the first quarter and the market shares of Target show that the model works," said CEO Brian Cornell in a statement. He added that Target is "well positioned to deliver strong financial performance in 2019 and beyond".
Despite the fact that shares have had a 22% run-up so far this year, we expect Target to continue to do well, under the guidance that his recent efforts to renew its stores, website and supply chain are bearing fruit .
2. Walmart: dazzling growth of e-commerce
Walmart (NYSE :), largely due to the robust growth of e-commerce sales, exceeded earnings expectations when it reported that it was on May 16th. The online sales of the largest retailers have increased rapidly compared to the rest of the industry.
The Arkansas-based retail visitor saw e-commerce revenue grow by 37% in the first quarter, boosted by the booming online food industry and stronger sales of fashion accessories and household items. That was even better than the online revenue growth of 33% a year earlier.
The dazzling growth in e-commerce provided further evidence that Walmart & # 39; s ongoing efforts to compete with Amazon in online retail space appear to be bearing fruit.
"We are continuing our transformation to become more of a digital company," said Doug McMillon, CEO of Walmart in a statement
The company also provided a solid update to sales growth in US equivalent sales, which increased by 3.4%, the best growth of that metric in the first quarter in nine years. It also marked the fourth consecutive quarter in which Walmart recorded sales growth of more than 3% in the same store.
Walmart appears to be continuing its strong performance in the coming quarters. The investments in technological innovation and e-commerce have transformed it into one of the best growing mature retailers in the online market
That said, one of the biggest threats to Walmart for the remainder of the year could be the possibility of additional trade rates, which would specifically affect clothing and footwear. "Increased rates will raise prices for customers," said CFO Brett Biggs.
Walmart shares, which closed at $ 102.42 last night, have gained 10% since the beginning of the year.
3. TJX companies: cashing in on large market share opportunities
Non-Price Retailer TJX Companies Inc (NYSE :), owner of the T.J. Maxx, Marshalls, and Home Goods brands reported that expectations beat on May 21, and provided more evidence that their company is weathering the retail storm much better than most of its competitors.
The Massachusetts-based retailer reported earnings of $ 0.57 per share on sales of $ 9.28 billion, a slight increase compared to earnings expectations of $ 0.55 on sales of $ 9.22 billion . Comparable sales increased by 5%, which amply exceeds the expectations for growth of 3.6%, thanks to an increase in the number of pedestrians, as the market share continues to rise at the expense of competitors who are turning away
"We are in an excellent position to take advantage of the abundant purchasing opportunities that we see in the market for quality, branded items and to have new, exciting assortments flow to our stores and online," said Chief Executive Ernie Herman in a statement. "We have many initiatives underway to continue to boost sales and customer traffic and we feel good about our ability to continue to gain market share around the world."
The company has also increased its full year guidance, saying that it now expects diluted earnings per share for the year ending February 1, 2020 to be in the range of $ 2.56 and $ 2.61 , an increase from $ 2.45 per share for the year before.
Consequently, management announced a dividend increase of 18% in the first quarter. This marks the 23rd consecutive year of TJX Companies that they have increased their quarterly dividend. It also bought back $ 350 million in shares during the first three months of the year. The stock currently yields 1.78%.
Taking all this into account, TJX remains an irresistible name in the retail space thanks to its resilient business model, which has outperformed retail apocalypse better than its competitors.
The shares were closed for $ 50.07 yesterday and have risen 12% this year so far.
