Happy Customers

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What's going on?

Retailer Target and Lowes were feeling awfully pleased with their shopping experiences after announcing better-than-expected second-quarter results on Wednesday.

What does this mean?

Sales at Targets existing stores were 24% higher than the same time last year, compared to the 9% analysts had been predicting. That uptick was partly thanks to a 195% rise in revenue in the companys ecommerce segment, which included a pause for effect 700% rise in curbside collection. The retailers quarterly profit jumped too by an expectation-busting 80%.


Home improvement retailer Lowes was too busy admiring its own handiwork to notice: sales at its existing stores grew by a higher-than-expected 35% versus the same time last year, and its profit was up 70%. It grew its sales faster than nosy neighbor Home Depot yet again too. In the first quarter, investors mightve put that gap down to a well-timed spring sale from Lowes. Now, though, it looks like it might be a more permanent fixture.

Why should I care?

For markets: Shop til your stock doesnt drop.


Targets stock rose 12% on Wednesday probably because its benefited from lockdown-enforced online shopping and stimulus check-enabled spending. And with school shopping season around the corner, the companys likely to keep benefiting. Lowes share price, on the other hand, only rose 1%. That could be because investors who mightve seen Home Depots positive update as promising news for its rival pushed up Lowes stock on Tuesday, meaning good news was already priced in to its stock.



The bigger picture: Zero sum game.


While Walmart, Target, Home Depot, and Lowes all did pretty well in the second quarter, off-price clothing retailer TJ Maxx (or TK Maxx in the UK) missed out. Its quarterly loss partly driven by forced store closures was worse than expected, and its shares fell 6%. Then again, it’s a “discretionary” retailer, not an “essential” one like Walmart and Target and as such wasn’t allowed to stay open throughout the pandemic like they were.

Originally posted as part of the Finimize daily email.

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