The American consumer is resilient, even in the face of broader worries over trade, interest rates, geopolitical tensions and a global economic slowdown that is looking increasingly like the precursor to a looming recession.
That's the takeaway from a pair of earnings released before the bell Wednesday from Target ($TGT) and Lowe's ($LOW). Both big-box retailers reported better-than-expected quarters, and taken together, helped paint a picture of a consumer economy still firing on all cylinders even as some retailers struggle to define their business model in an era of e-commerce.
Target and Lowe's joined Walmart ($WMT) in establishing a trifecta of surprisingly strong growth for retail giants that still do most of their business in brick-and-mortar stores. Same-store sales, the all-important metric for the sector, rose 3.4 percent and 2.3 percent for Target and Lowe's, respectively. Target shares rocketed higher by 18 percent ー the stock's biggest percent gain since October 2008 ー trading at an all-time high as of midday Wednesday. Lowe's shares were up 10 percent.
The two retailers, alike in some ways, offer different stories about the U.S. consumer, according to Ken Leon, global director of industry and equity research at CFRA. He told Cheddar that the Target beat shows that the company "has found the right formula for its stores, and we're seeing those results."
Target has been pouring money into new innovations, like BOPIS (Buy Online, Pick up In Store), that leverage its existing real estate and are proving to be attractive to customers who don't want to brave checkout lines or wait for delivery. Target is also experimenting with speedier shipping to better compete with Walmart and Amazon ($AMZN). The company known for its fashion and furnishing labels also just announced its largest private-label launch ever with its Good & Gather grocery line (though that would not have impacted the most recent quarter).
For Lowe's, "it's a turnaround story," said Leon. The home-improvement space has suffered more than other segments of retail because of jitters that tariffs could start significantly denting sales. Home Depot ($HD) mentioned as much in its latest mixed earnings report, though it also beat sales estimates in Q2.
Leon pointed to the fact that ー trade war or no trade war ー wages are rising, albeit slowly, unemployment is low, and Americans are staying put for longer.
"Those staying in their homes are going to spend more to fix a kitchen or a bathroom," he said.
Ford is recalling more than 355,000 of its pickup trucks across the U.S. because of an instrument panel display failure that’s resulted in critical information, like warning lights and vehicle speed, not showing up on the dashboard.
Nvidia reported a 56% increase in second-quarter revenue and a 59% rise in net income compared to a year ago.
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President Donald Trump's administration last month awarded a $1.2 billion contract to build and operate what's expected to become the nation’s largest immigration detention complex to a tiny Virginia firm with no experience running correction facilities.
Netflix CEO Ted Sarandos claims audiences don't want to watch Netflix movies in theaters, but that seems not to be the case recently.
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Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
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Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
Cracker Barrel is sticking with its new logo. For now. But the chain is also apologizing to fans who were angered when the change was announced last week.
