Target's Omnichannel Push
The "Amazon Effect" has forced all retailers to step up their “omnichannel” game or face extinction. The ominichannel phenomenon is the ability to compete through brick and mortar and online by redesigning distribution networks and streamline supply chain operations to best serve customers on and offline. Some retailers, such as Target
are already ahead of the curve as they continue to merge the digital and physical space into one seamless customer experience. Target announced earnings on Tuesday and some of the highlights were the following:
Sales at Target stores open for at least 12 months were up 5.1 percent, slightly short of expectations for growth of 5.2 percent. The company said digital sales rose 49 percent during the third quarter and contributed 1.9 percentage points to same-store sales growth. It said the number of transactions at its stores jumped 5.3 percent, while the average shopper's ticket dropped 0.2 percent.
Target's third-quarter gross margin rate fell to 28.7 percent from 29.6 percent a year ago, with the company attributing the decline to higher supply chain costs as it fulfills more online orders ahead of the holiday season. It also said it ordered more holiday-related inventory ahead of the fourth quarter, earlier than when it did last year. Target ended the quarter with inventories up nearly 18 percent.
And it's investing in logistics to be more competitive with Walmart and Amazon. This holiday season, for example, Target is dropping its minimum purchase threshold for free, two-day shipping, while Walmart still has a $35 threshold.
Despite Target doing what it needs to do to survive long term, Wall Street wants to be paid now,
and paid later or else and so the stock price sold off because of increased inventory (which ties up cash) and profit margins decrease (due to making the right investments).
"While digital channel sales continue to grow rapidly, we are benefiting from the healthy traffic and sales growth in our stores as well," Cornell told analysts on a separate call Tuesday. "I will say that we are optimistic about our ability to deliver profitable growth next year and beyond."
So where is the price of Target headed next, lets go to the charts to find out?
Price recently broke the monthly up trendline.
However, price hit the weekly demand at $65.50 and is pulling back.
Because price gapped down after earnings, it's best to wait two more days until price shows us which direction it wan't to head in next.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
This is actually one of the few retailers I think has done a good job but have been punished for investing too much in itself. Reminder that rumors have been around that Amazon may want to buy them! Unbelievable, but then you remember that Amazon bought Whole Foods!
Very true, you can't win with Wall Street unless you ignore it like Amazon did for so many years.