Reports Q2 2021 results Wednesday, August 18 before opening
Expected Revenue: $24.95 B
EPS forecast: $3.49
If discount retailer Target (NYSE:) reports profit tomorrow, investors will focus on the US chain's ability to perform in the post-pandemic environment after strong growth over the past year.
The nation's largest retailers benefited immensely from the surge in stock inventory by US consumers that resulted in huge spikes in sales of some categories, such as toilet paper, snacks, and cleaning products. The surge in demand was so strong that Target was up by more in the past fiscal year than in the previous 11 years.
As the US economy reopens, many analysts believe the best days for sales growth for these big-box retailers are behind us.
That could be true for sales figures given the difficult comparisons to last year's pandemic boom, but changing consumer buying preferences also mean hefty margins. Target told investors in May that it expects wider margins for 2021 than earlier this year, spurred by a shift in demand for more profitable items such as clothing and home decor.
The Minneapolis-based retailer expects its full-year operating profit margin to be "well above" last year's 7% level, potentially reaching 8% or more.
Target's latest earnings report also showed that the company remains well-positioned to capture market share from competitors weakened by the pandemic, due to TGT's superior online services, including same-day order pick-up and delivery. . Continue To Surge
In recent years, Target has ramped up its investments in online services. Instead of spending a lot of money to set up a huge network of online fulfillment warehouses, it used stores as hubs to ship online orders or to allow shoppers to pick up their orders from store parking lots. .
These benefits have helped Target stocks perform exceptionally well during the pandemic and beyond. The stock is up about 50% this year, significantly outperforming Walmart (NYSE:) over the period. TGT shares closed at $263.15 on Monday.
Many analysts believe that Target will be able to maintain its market share gains even after the pandemic is contained. UBS analyst Michael Lasser said in a recent note that Target has resembled some of the specialty retail success stories more than its traditional rivals in recent years.
The note read:
“We believe that TGT has distinguished itself in many ways over the past few years, but most importantly, it has generated an average traffic growth of 4.8% over the past 13 quarters. This is comparable to Home Depot (NYSE:) (4.9%) and LOW (NYSE:) (4.8%) and higher than COST (NASDAQ:) (4.5%), showing how relevant it is become for consumers."
Last line
Doel continues to grow strongly, even after the pandemic-induced boom, given its growing market share and remodeling of its stores. Tomorrow's profits may provide further evidence to support this view.
