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As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the large-format grocery & general merchandise retailer industry, including Target (NYSE:TGT) and its peers.
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
The 4 large-format grocery & general merchandise retailer stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 4.2% on average since the latest earnings results.
Weakest Q3: Target (NYSE:TGT)
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Target reported revenues of $25.67 billion, up 1.1% year on year. This print fell short of analysts’ expectations by 0.9%. Overall, it was a softer quarter for the company with full-year EPS guidance missing analysts’ expectations.
"I'm proud of our team's efforts to navigate through a volatile operating environment during the third quarter. We saw several strengths across the business, including a 2.4 percent increase in traffic, nearly 11 percent growth in the digital channel, and continued growth in beauty and frequency categories. At the same time, we encountered some unique challenges and cost pressures that impacted our bottom-line performance," said Brian Cornell, chair and chief executive officer of Target Corporation.
Target delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 15.8% since reporting and currently trades at $131.39.
Read our full report on Target here, it’s free.
Best Q3: BJ's (NYSE:BJ)
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
BJ's reported revenues of $5.10 billion, up 3.5% year on year, in line with analysts’ expectations. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ EPS estimates.