The two largest US retailers, Walmart (NYSE 🙂 and Target (NYSE :), are reporting their earnings this week and investors will focus on their ability to perform in the post-pandemic environment as the economy reopens and buying pattern of people return to normal.
Both Walmart and Target benefited immensely from the waves of pantry loading that resulted in massive spikes in sales for some categories, such as toilet paper, snacks and cleaning products. As the US economy reopens after a successful vaccination, many analysts believe that the best days for sales growth for these major retailers are behind us.
Walmart itself warned in February that it will slow down sales and earnings for the year, saying that earnings per share will decline slightly. While US comparable store sales will remain positive this year, they will grow at low single digits, according to Walmart in Bentonville, Arkansas, below the recent breakneck pace, but in line with estimates.
Analysts forecasting the company's $ 1.21 per share profit on revenue of $ 132.16 billion for the first quarter of fiscal year 2022. The company is reporting for the opening bubble tomorrow.
As consumer behavior normality returns, Walmart is pushing for new growth areas such as advertising and web marketplaces to capitalize on its successful digital engagement during the pandemic. . Those moves could generate more sales, but there is no guarantee that in the post-pandemic environment it will manage to soften the blow to its sales.
These uncertainties have brought gains in Walmart stocks to a halt, which, after gaining 20% ??in 2020, haven't moved this year. They closed at $ 139.52 on Friday, down more than 3% for the year.
Targets Gains Significant Market Share
But the outlook still looks promising for Walmart competitor Target, a chain store that gained significant market share during the pandemic.
Target has attracted new customers and inspired more purchases with its e-commerce offering and a wide variety of merchandise from cereal to training pants as competitors such as Macy & # 39; s (NYSE 🙂 and Kohls (NYSE 🙂 Temporarily closed stores and saw sales decline during the pandemic.
The Minneapolis-based retailer gained approximately $ 9 billion in market share in the past fiscal year, citing internal and third-party research. Many analysts believe that Target will be able to maintain its gains in market share even after the pandemic has been contained.
His customers' willingness to keep coming to Target stores is a result of Chief Executive Officer Brian Cornell's efforts to make Target's outlets more attractive. He led the remodeling of hundreds of stores, introduced many affordable fashion brands and enhanced the retailer's e-commerce offering. During the pandemic, Target used its stores more as mini-distribution centers for its fast-growing digital business to better handle online orders.
Analysts expect the company to report $ 2.18 EPS on revenue of $ 21.61 billion when reporting its first quarter 2021 earnings Wednesday before market opening.
With that growth momentum, investors who have invested in Target stock have made hefty profits. Shares have continued their upward trend this year and performed strongly compared to their competitors. The target share is up 20% this year, closing at $ 211.16 on Friday. The stock has risen more than 75% in the past year.
Bottom Line
We love both Walmart and Target for long-term investment. Each is a reliable defensive stock that one could buy and hold. That said, Target is in a better position to continue to make strong profits in the post-pandemic world, given the growing market share and remodeling of its stores. This week's earnings can further support this view.
