Target Reveals Major Price Cuts Ahead Of Earnings

Retail earnings continue rolling out this week with Target and TJX (TJX) reporting early Wednesday. BJ’s Wholesale Club (BJ) and Ross Stores (ROST) are also on deck. Target stock eased Tuesday ahead of results while TJX shares were little changed.

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Retail results have managed to beat soft expectations so far this quarter. Walmart (WMT) scored a breakaway gap last week after beating estimates with a 22% earnings increase. Walmart noted that it continues to draw newer and more-frequent shoppers amid price inflation, while also attracting higher-income earners. The Dow Jones behemoth also said it expects full-year earnings and revenue to be at the top-end or slightly above its prior guidance.

Lowe’s (LOW) on Tuesday posted a 17% drop in Q1 earnings but still managed to top analyst forecasts. Rival Home Depot (HD) last week reported better-than-expected earnings, although the company’s EPS declined 5%. Both Lowe’s and Home Depot maintained their full-year outlooks. Elsewhere, Macy’s (M) on Tuesday topped earnings forecasts and raised its outlook, despite a nearly 52% decline in EPS. The legacy department store said it is in the “early innings” of turning around its performance.

However, Home Depot and Lowe’s stock have fallen on results while Macy’s rose slightly, though it’s still below its 50-day line.

Target

Target (TGT) on Monday announced that it is slashing prices for around 5,000 everyday items ranging from milk, snacks and fresh produce to diapers, paper towels and pet food. Some 1,500 reductions have already been made, with more coming over the summer. Target said it routinely adjusts prices to stay competitive.

“We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,” Rick Gomez, executive vice president and chief food, essentials and beauty officer, said in the earnings release.

Meanwhile, Target foot traffic appears to have grown in Q1. Visits to target were up 3.5% year over year in Q1, according to data from Placer.ai. However, traffic growth slowed to a 1.4% increase in April from 6.3% growth in March.

For Target’s Q1 results early Wednesday, FactSet analysts expect earnings to tick up 1 cent year over year to $2.06 per share while revenue slides 3.2% to $24.518 billion.

In March, Target guided Q1 earnings to $1.70-$2.10 per share during its fourth-quarter beat. The retailer expects Q1 comparable sales to decline 3% to 5%.

Target Stock

Target stock eased 0.9% Tuesday to 155.27 ahead of results. Shares fell 2.1% on Monday following the Target price cut announcement.

TGT stock undercut the low of an eight-week flat base with a 181.86 buy point. The base has a depth of about 14%, MarketSurge charts show. A decline of more than 15% — or below 154.58 — would mean it’s no longer a flat base but a general consolidation.

Target stock advanced 8.9% so far this year.

TJX

FactSet predicts TJX earnings will increase 16% to 88 cents per share, which would mark seven consecutive quarters of growth. Analysts expect the off-price home and apparel retailer’s revenue to increase for the sixth quarter in a row, climbing 6% to $12.48 billion.

TJX’s Homesense store traffic rose 9.9% year over year in Q1, according to Placer.ai data. However, HomeGoods visits fell 1.6%. T.J. Maxx and Marshalls’ visits increased 8.9% and 7.9%, respectively, in the first quarter.

However, traffic appears to be slowing in April, particularly for TJX’s home furnishing offerings. Homesense visits were down 1.3% in April and HomeGoods traffic declined 2.8%. T.J. Maxx and Marshalls’ visits rose 2.7% and 1.9% during the month, Placer.ai reported.

TJX stock edged lower Tuesday.

Shares are trading below a 102.04 buy point for a 13-week, double-bottom base. TJX slipped below its 10-day moving average this week and is trading just above its 50-day line.

TJX stock rose 4.2% so far this year.

Other Retail Earnings

Elsewhere, membership warehouse chain BJ’s Wholesale reports results early Thursday, followed by off-price apparel retailer Ross Stores after the market closes.

Analysts forecast BJ’s earnings will slide 2.4% to 83 cents per share on 2.8% revenue growth to $4.86 billion.

BJ stock is trading in a buy zone for a major consolidation going back nearly a year. Shares broke out above the 78.88 buy point in early March.

Wall Street predicts Ross earnings will increase 23.9% to $1.35 per share, slowing after three quarters of accelerating growth. Sales are seen rising 7.4% to $4.83 billion.

Ross Stores is trading just above the 200-day line, sliding since early March.

Costco Wholesale (COST) is on tap next week with its earnings due May 30. COST stock is trading in range of a 787.08 cup-base buy point.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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