Finance
TARGET CEO: This may be strongest consumer environment I’ve ever seen
Monica Schipper /
Stringer
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Retailers are reporting the strongest
sales in over a decade, beating earnings and lifting
full-year guidance. -
“We’re currently benefiting from a very strong
consumer environment, perhaps the strongest I’ve seen in my
career,” Target CEO Brian Cornell said. -
Jefferies analysts say there’s no need to worry
about the “rise of Amazon” as the e-commerce giant “isn’t
good at selling things non-commoditized fashion
goods.”
American retailers experiencing the best consumer environment
in over a decade.
Companies across the retail sector, including Target,
Walmart, and Nordstrom, have been reporting their strongest
sales in more than 10 years, beating earnings
on the top and bottom lines, and lifting their full-year
guidance.
“There’s no doubt, that like others, we’re currently
benefiting from a very strong consumer environment, perhaps the
strongest I’ve seen in my career,” Target CEO Brian
Cornell said on his company’s second-quarter earnings call on
Wednesday.
He added: “Total sales were up 7% from a year
ago reflecting 0.5 point of growth from our new and
non-mature stores. Store comparable sales increased nearly
5%. And digital sales grew more than 40% in the second
quarter, as guests continued to respond to a growing menu of
convenience of women options, newness throughout our
merchandising categories, freshly remodeled stores and a
higher level of service across the chain.”
The strong results led a team of Jefferies analysts,
led by Randal Konik, to declare, “BUY RETAIL!” on eight
separate occassions in Wednesday’s note to
clients.
“The consumer is the strongest since ’99, companies are
managing inventories very well, digital investments are paying
off, real estate is being rationalized, EBIT% moving higher,
ROIC up, cash flow is piling up, share counts are down
massively, valuations are still cheap and retail stocks are
underowned,” the team wrote.
They said there’s no need to worry about the “rise of
Amazon” as the e-commerce giant “isn’t good at selling things
non-commoditized fashion goods.”
Retailers have refocused capital investments away from
brick & mortar building and moved head long into digital
investments in areas of fulfillment, supply chain, delivery,
and mobile commerce among other area.
Jefferies’ top picks in the space includes Gap, Michael
Kors, Kohl’s, and Under Amour.
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