Your Wednesday Blip 8/19/20

Your Wednesday Blip 8/19/20

Retail earnings reports continue to show positive results however markets appear to be hitting resistance after setting record highs. At the close the Dow fell 85 points on light volume and finished the day at 27,693.
Target posted earnings and the results smashed Q2 forecasts as the company is reaping benefits from investments in stores, pricing and omnichannel products. The gurus had expected Target to post an 11% earnings decline but the actual figure came in with an 86% increase while revenue jumped 25%. Same store sales were up 24.3% and digital sales grew 195%. Same-day services which include order pickup, drive up and online delivery soared 273%. The company did not issue forward guidance and expects a weak back to school selling season but with millennials now looking to “#buyahome” and “#moveoutofthecity” Target is expected to benefit from purchases that usually accompany the household formation trend.
Lowe’s Home Improvement followed in Home Depot’s tracks posting a Q2 earnings beat of eye popping proportions. Revenue was up 30% and net income grew 74% beating estimates like a rented mule. CEO “Marvelous” Marvin Ellison said they are seeing continued momentum in August and with investments in omnichannel capabilities they expect continued growth thanks again to trends in housing which include remodeling and single family home purchases.
What appears to be happening in the world of retail is that smaller outfits like Sur Le Tab struggle as they do not have the resources to compete with the online Amazon’s of the world while home improvement and stores like Walmart or Target are gaining as they become the “go to” places to shop in the age of the pandemic. These stores are benefiting from gubment stimulus, work at home, buy a home trends plus consumers having extra cash to spend because they are not traveling or hanging out in bars.

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