Retailers Confront Coronavirus Uncertainty -- Update
March 03 2020 - 8:35AM
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.
On Tuesday, 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 new fiscal year 2020, Target forecast per-share earnings
between $6.70 and $7.00. Analysts had expected full-year earnings
per share of $6.88, according to FactSet.
While no one is immune to inventory risk, the larger chains such
as Walmart Inc., Target and Home Depot Inc. are better positioned
than smaller chains, analysts at Wells Fargo wrote in a research
note Monday.
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 update investors Tuesday.
On Tuesday, Kohl's reported flat sales and profit in the holiday
quarter. For 2020, the retailer forecast comparable sales change in
the range of -1% to 1%, after posting a 1.3% decline for 2019.
Target 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.
For the full-year, Target's comparable sales rose 3.4% and
digital sales rose 29%. For fiscal 2020, Target predicted
comparable sales would rise by a mid-single digit percentage.
Shares of Walmart, Target, Costco and other big retailers
rallied Monday, outpacing a broader market rally and recouping some
recent losses. Shares of Target were little changed in premarket
trading, while Kohl's shares jumped 10%.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
March 03, 2020 08:20 ET (13:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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