Target Not Sharing Wal-Mart's Woes (TGT, WMT)

Target Corp. (NYSE:TGT) reported in-line earnings and gave guidance that was basically in-line with prior targets.  The retail giant posted $0.80 EPS against $0.80 estimates, and revenues were $14.62 Billion versus $14.67 Billion estimates.  Target said it expects earnings of $3.60 per share remains within the range of likely outcomes for its fiscal earnings target. That’s in line with the company’s prior guidance and slightly below analysts’ average estimate of $3.63, but it in no way is full of the caution that Wal-Mart (NYSE:WMT) recently gave with its guidance.

To top it off, Bob Ulrich said in the press release that he believes Target will deliver strong sales and profit performance in 2007 AND generate another year of profitable market share growth.  Profitable market share growth is key for the retailer, as that is likely coming right out out of Lee Scott’s efforts.  Wal-Mart seems to have an excuse for every aspect of the business, and Target is apparently able to keep a higher income customer base in comparison.  If you have stepped into the stores for a comparison lately, you will see that Target wants to go for quality and experience and Wal-Mart is stuck on lowest priced items.  That might not hold true on 100% of the items, but the stores are night and day for a shopping experience.

Target is still using the 4% to 6% growth for same store sales, yet Wal-Mart is using the 1% to 2% bogeys.  Maybe that will change in time, but that "profitable market share growth" seems to be key.  Target shares are  trading up 1.5% at $60.00 in pre-market trading, and Wal-Mart shares are simultaneously indicated down less than $0.10 at $43.51. 

Jon C. Ogg
August 21, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.