What Target and Walmart’s Earnings Tell Us About Consumers

Target (TGT) recently released its first-quarter earnings, missing Wall Street estimates, showing a 3% year-over-year loss in comparable sales and a 1.9% year-over-year decline in U.S. traffic. Meanwhile, Walmart’s (WMT) latest quarterly report revealed U.S. comparable sales and traffic grew 3.8% year-over-year.

Yahoo Finance retail reporter Brooke DiPalma joins Wealth! compare the earnings data of these two retail giants with what they signal about consumers.

For more expert insights and the latest market action, click here to watch the full episode of Wealth!

This post was written by Nicholas Jacobino

Video transcription

Target released its first-quarter earnings report today, and it failed to impress Wall Street, as company executives cited inflation as the main reason for the decline in traffic and transactions.

Meanwhile, as you’ll remember, reports from rival Walmart last week said that despite continued low inflation, consumers are looking for value.

We want to explore what these reports from two of America’s largest retailers say about consumers.

And here are more details.

We have Brooke Dipalma here from Yahoo Finance.

So Brooke, let’s break it down.

Yes, good morning, Brad.

It’s really a tale of two retailers whose target falls short at the beginning of trading.

While Wal Mart is more or less flat here, and in fact, same-source sales from target are disappointing on the street down about 3.7%.

Last week we saw same-source sales at Walmart impress the street with a 3.8% increase.

What does it mean.

Consumers go to Wal Mart for these value propositions.

They are truly impressed with the deals, prices, and everything Walmart has to offer.

We know that in recent years they have been expanding their range and certainly expanding their offer.

In addition to this, to prove that consumers are growing, let’s take a look at the traffic numbers we saw in the last target quarter: 1.9% traffic decline.

However, we saw Walmart increase foot traffic by 3.8%.

I won.

The Mart has been widely known for its increase in foot traffic over the past few years, especially after the pandemic when consumers’ wallets got thinner and they saw, “Hey, Wal Mart is doing all these makeovers.”

All these store renovations are starting to look like a destination.

Where can I find the best bang for my buck?

And they’re definitely going to Walmart these days.

Surely.

So Brooke, why don’t we target e-commerce performance here based on what we track and how we ultimately compare it.

What do we see there?

Yes.

Well, if you take a closer look at both of them, the target comparison has actually seen a slight increase in e-commerce.

CEO Brian Cornell alluded to the fact that digital sales growth for the first time in over a year, I should emphasize, was for same-day services, an increase in store pickups and same-day deliveries, which resulted in an increase in e-commerce sales target of 1, 4%.

Now, Walmart also saw e-commerce sales increase by 2.8%.

Last week, Walmart highlighted the value and convenience that consumers are really looking for here.

Not only are they looking for low prices, but they want easy pickup, they want to get in and out of the store quickly, or they want products delivered to their home and Target is starting to take notice.

We saw them relaunch their Target Circle rewards program in April.

So they certainly want to find out what consumers really want in this offer, er, they also value comfort and convenience these days.

Yes, I am looking for great convenience and same day services as mentioned in the earnings report.

Brooke.

Thank you so much for breaking this down.

I appreciate it.