Walmart and Target, two of the largest big-box retailers, showcased diverging fortunes in their latest earnings reports, highlighting contrasting consumer spending trends and strategic execution.
Target’s Challenges
Target’s stock plummeted 22% to a 52-week low following its largest earnings miss in two years and a reduction in its full-year forecast. The company cited higher costs due to inventory adjustments following the October port strike and declining demand for discretionary items.
CEO Brian Cornell described cautious U.S. consumers navigating years of inflation and prioritising deals, noting a “deceleration in discretionary demand”.
Target’s same-store sales edged up just 0.3% year-over-year, and online sales increased by nearly 11%, both lagging behind rivals.
Walmart’s Strengths
In contrast, Walmart hit record highs after the company reported robust growth and raised its full-year forecast. Its same-store sales rose 5.3%, driven by gains in both grocery and discretionary categories, while global e-commerce sales surged 27%.
Walmart also noted an increase in higher-income shoppers and improving demand beyond essentials.
Customer traffic grew by 3.1% at Walmart, outpacing Target’s 2.4%.
Diverging Paths
The contrasting results underscore where consumers are willing to spend, with Walmart gaining market share as Target struggles to adapt.
Target’s leadership stability remains a question, with CEO Brian Cornell set to lead through 2025.
Cornell noted: “We'll continue on our current strategy, stay in step with the consumer and make sure Target's doing the things that consumers across America expect from us.”