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.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
