Target Badly Crippled By Competition

By Douglas A. McIntyre Published May 21, 9:05AM EDT

Quick Read

Just Too Small To Compete
Long History Of Poor Stock Performance
Poor Reputation
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Target Badly Crippled By Competition — © Alex Wong / Getty Images News via Getty Images

One of the best ways to gauge how badly Target (NYSE: TGT | TGT Price Prediction) has been beaten down by competitors is to look at the five-year performance of the company and its competitors, Walmart and Costco (NASDAQ: COST). Over the period, Target’s stock has been down 45%. Walmart’s (NYSE: WMT) is 131% higher. Costco is up 180%. Investors abandoned the chance of a recovery long ago, and Target’s results show why

In the most recent quarter, Target largely outperformed expectations. Revenue rose 6.7% to $25.4 billion. But net earnings were a less-than-modest $781 million, down 24% from the year-ago period. Earnings were not the sole measurement of Target’s problem. The worst problem is scale.

Costco’s revenue in the most recent quarter was $68.2 billion. Walmart’s comparable figure for its US operations was $117 billion. But by these standards, Target is very small.

Target bests Costco in locations. Costco has 634 in the US and Puerto Rico. Target has 2,000. Walmart has 4,600. The edge Costco has, however, is the genius of its model. It charges people to shop in its stores. Its quarterly membership fees are slightly more than $1.3 billion, almost all of which goes to the bottom line. They are about 65% of Costco’s operating income. No other large retailer has been able to match the powerful financial structure.

Walmart’s muscular model is that 90% of Americans live within 10 miles of a Walmart or Sam’s Club. And, Walmart has a substantial e-commerce business.

Another problem Target has is its image among Americans. It is a poor one, which makes it difficult to bring people through its doors. Based on the 2026 Axios Harris Poll 100 reputation rankings, which were just released, Target ranks 71st. Costco ranks fifth. Walmart ranks 83rd. Walmart’s figure hasn’t kept it from being America’s largest retailer by far.

Amazon (NASDAQ: AMZN) has been charged with ruining America’s retail landscape. Whether that is true or not, it affects almost every store chain in the country. Its North America e-commerce revenue was $104 billion in its most recently reported quarter. Target, based on Amazon’s success, is one of its victims.

Target has the problems of scale and reputation. It is too far behind the industry leaders to catch up, or even come close

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.