Fears of a retail apocalypse may be overblown. At least, in the case of Target.
Shares of the omnichannel retailer are up 95.5% this year, putting Target’s stock (ticker: TGT) on track to have its best year since 1975, according to FactSet data. That is all the more stunning considering its closest competitor, fellow discount retailer Walmart (WMT), has also had a formidable year but managed only a 28.4% stock-price gain. Amazon.com (AMZN), which has been blamed for bricks-and-mortar retailers’ troubles, is up only 24.5% this year.
Target’s roaring success comes at a time when other big bricks-and-mortar retailers have stumbled. Sears filed for bankruptcy late last year after years of declining sales. Macy’s (M) shares are off 44.6% for the year and Kohl’s stock (KSS) is down 23.2%. J.C. Penney shares (JCP) have been trading below $2 since September 2018, down from more than $11 in 2016.
The company didn’t immediately respond to a request for comment.
The gloomy outlook for retailers has had short sellers smelling blood . Many have been eager to bet against individual names as well as the broader SPDR S&P Retail exchange-traded fund and mall operators that have faced vacancies, according to a recent Wall Street Journal report.
But Target has bucked the downward trend in recent years, leading to its spectacular ascent in 2019.
Sales at stores open at least a year grew 4.2% in through the first nine months of its fiscal year, Target said when it reported earnings in November. This is on top of year-over-year growth of 4.9% in the same period in 2018.
Like many traditional retailers, Target has worked to strike a balance between spending to attract customers to its stores, while also recognizing that people increasingly prefer to shop online.
And its work has been paying off: Digital sales grew 31% year over year during the company’s third quarter, with 80% of those sales coming from shoppers electing to use same-day services such as delivery and order pickup. Target said in November that to continue its momentum though the end of 2019, it increased holiday payrolls by $50 million and doubled the number of people fulfilling online orders.
Investors will have to wait until next year to weigh the success of those efforts. Target will release its postholiday update on Jan. 15.
Write to Carleton English at carleton.english@dowjones.com
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December 29, 2019 at 07:30PM
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Target Stock Nearly Doubled in 2019. Don’t Write Off Retailers. - Barron's
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