Trump escalates the trade fight between
the U.S and China and rips Federal Reserve President Jay Powell.
Trump tweeted earlier today that «Starting on October 1st,
the 250 Billion dollars of goods and products from China, currently
being taxed at 25%, will be taxed at 30%.
…..Additionally, the remaining 300 Billion dollars og goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. And all that led to a Market chaos on Friday.
I`m watching the retailer market
closely and Target is one of them along with Walmart. Target
Corporation is the eitht-largest retailer in the U.S, and they
operates 1,851 stores throughout the U.S.
Their retail formats include the
discount store Target, the hypermarket Super Target, and
«small-format» stores previously named City Target and
TargetExpress before being under the Taget branding.
Target is often recognized for its
emphasis on «the needs of its younger, image-conscious shoppers»,
whereas its rival Walmart more heavily relies on its strategy of
«always low prices». The company is expected to report earnings on
Wednesday 21, before market open.
The report will be for the fiscal
Quarter ending July this year, and the consensus EPS forecast for the
quarter is $1,62. The same quarter last year was $1,47. The consensus
revenue estimate is $18,32 Billion and that`s up +4,4 percent YoY.
Target has a strong first quarter
performance and digital sales will continue to help the top line. We
saw Walmart had a very impressive second quarter numbers. Can Target
match Walmart in the retail business? If they can follow its 1Q19
results that was robust, we will see growth in digital sales.
They do it well with their «same-day
pickup», curbside service and Shipt. Retailers like Target and
Walmart also have another story to tell when it comes to foot traffic
than many of the trendy fitness retailers.
Target spend a lot of money to improve its stores. Will this continue? Probably, because they has remodeled «only» 400 stores so far in the last two years. They are planning to remodel an additional 600 stores over the next two years.
Home Depot is expected to report
earnings on Tuesday 20, before market open, and the report will be
for the fiscal Quarter ending in July this year. The consensus EPS
for the quarter is $3,08 and that`s a little bit higher than last
year at the same at $3,05. The consensus revenue estimate is $31,01
Billion and that`s up 1,8 percent YoY.
This is a high quality stock and the
rise from the financial crisis has been massiv. Home Depot has beaten
EPS estimates 100 percent of the time over the last two years.
Revenue estimates is beaten 75 percent of the time.
This is the holiday quarter for Home
Depot. A different retailer than others that are struggling with
e-commerce and malls. Do we see any recession here? Not at all. The
consumers spend money at Home Depot and they can afford to do it
because they have jobs and money. That puts the company in the same
folder as Walmart.
Home Depot scheduled a conference call at 9 a.m Eastern time on Tuesday 20, 2019.
Walmart is the world`s third largest
employer by numer of employees. 2,2 million worldwide last year with
1,5 million in the U.S and 700,000 international. Walmart Inc is an
American mutinational retail corporation that operates a chain of
hypermarkets, discount department stores and grocery stores.
The company is expedted to report earnings on Thursday 15 before market open. The report wil be for the fiscal Quarter ending July 2019. The consensus EPS forecast for the quarter is $1,22, and the report for the same quarter last year was $1,29.
As of April 30, 2019, Walmart has
11,368 stores and clubs in 27 countries, operating under 55 different
names. The company is the world`s largest company by revenue, with
US$514,405 billion. It is a publicly traded family-owned business, as
the company is controlled by the Walton family.
So far in 2019, Walmart is the largest
U.S grocery retailer, and 65 percent of Walmart`s US$510,329 billion
sales came from U.S operations. Their investments outside America
have seen mixed results. Its operations and subsidiaries in the U.K,
Central and South America, and China are highly successful, whereas
its venture failed in Germany and South Korea.
Their approach to Amazon`s busines
model and international expansion will continue to lift the company
further. The street is looking for a top-line growth of 1,7 percent
but there is concerns over the impact of trade war.
Many investors will watch out for the
margins on the report as the cost of some of the goods are changing.
JPMorgan has estimated in a report that the company could see up to
40 percent reduction in operating profit because of the tariffs on
Chinese imports. But that will have an impact on the next quarter.
The online sales is a success and its
going straight up. The e-commerce activity are up 37 percent YoY.
They compete with Amazon and they are both speeding up their delivery
times. In my recent article the headline was retail acopalypse, but
what about Walmart?
They have also closed a lot of stores
but Walmart has the best developed web grocery business with 2,450
stores offering curbside order pickup.
Walmart`s online growth has come at a cost to profitability, though. Gross margins of 24,3 percent were in line with analysts estimates but did mark a slight YoY contraction. That can be attributed to higher labor costs, plus online sales that typically deliver lower margins that in-store sales.
The company also said in a report that transportation expenses have eased somewhat this year. CFO Brett Biggs recently said; “Our first quarter results put us in a good position to achieve full-year goals.”
Walgreens announced yesterday that they
will close 200 US stores. A company that was founded 118 years ago.
But Walgreens is not alone. About 12,000 stores are expected to close
in the U.S this year.
According to CoStar Group, retailers closed a record 102 million square feet of store space in 2017, but that number was smached in 2018 by closing another 155 million square feet. To sum up; that`s thousands of stores.
So far this year, 29% more stores
closings announced than last year, according to Coresight Research.
They tracked the 5,864 closings in 2018, which included all Toys R Us
stores and hundreds of Kmart and Sears locations.
This year, Sears are planning to close another 21 stores while Kmart will close «only» 5 stores in October. Kmart closed 48 stores earlier this year. That`s nothing compared to Walgreens’ 200 stores. Or Fred`s 442 with another 129 stores.
We have to keep in mind that some of
the retailers also are opening new stores while closing locations at
the same time. But……
The pain will continue for years to come. According to UBS, if the e-commerce penetration continue to rise up from its 16% level to 25%, about 75,000 stores need to be shuttered within a few years.