Retailers Confront Coronavirus Uncertainty
March 03 2020 - 7:04AM
Dow Jones News
By Sarah Nassauer
Target Corp., Kohl's Corp. and other retailers that posted
lackluster holiday results must now confront the uncertainty caused
by the coronavirus, which could help or hurt sales in the coming
months.
In recent days, grocers have logged strong sales as some
consumers stock up on food and other staples. The virus could also
speed the shift to online ordering as people avoid visiting
stores.
Costco Wholesale Corp.'s website was sold out Monday in the New
York area of several items such as Jif peanut butter and Kraft
Macaroni & Cheese. Meanwhile, Amazon.com Inc.'s app for Prime
Now same-day grocery orders warned customers in San Francisco,
Seattle and other cities that delivery availability may be
limited.
Economists say it is too soon to know how serious an impact the
virus will have on consumer spending but it could upend supply
chains causing some product shortages, especially as retailers run
out of Chinese made goods already stocked in warehouses.
While no one is immune to inventory risk, the larger chains like
Walmart Inc., Target and Home Depot Inc. are better positioned than
smaller chains, analysts at Wells Fargo wrote in a research note
Monday.
Shares of Walmart, Target, Costco and other big retailers
rallied Monday, outpacing a broader market rally and recouping some
recent losses.
A widespread coronavirus could also dent demand at department
store chains like Kohl's or Nordstrom Inc. that rely on apparel and
don't sell groceries. Executives at both are expected to report
quarterly results and update investors Tuesday.
Target on Tuesday projected improved sales growth in the current
quarter after logging lackluster gains in the quarter ended Feb. 1.
The outlook reflected the company's expectations for coronavirus, a
spokeswoman said.
Executives are expected to provide more details at a briefing
later Tuesday. The company canceled an investor meeting scheduled
for New York amid coronavirus concerns and will instead brief
investors via a webcast.
Target reported comparable sales, which include stores and
digital channels operating for at least 12 months, rose 1.5% during
the quarter ended Feb. 1. The results were in line with a warning
the company issued in January, when executives cited weak toy and
electronics sales.
For the full-year, comparables sales rose 3.4% and digital sales
rose 29%. For fiscal 2020, Target predicted comparable sales would
rise by a mid-single digit percentage.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
March 03, 2020 06:49 ET (11:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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