Target Crushed by Walmart
Target has ambitious plans to turn around its weak performance, but is it too small to compete successfully with its larger rivals?
Target Corp. (NYSE: TGT | TGT Price Prediction), the second-largest big-box retailer in the United States, posted poor fourth-quarter and 2023 results. A week earlier, its larger rival posted numbers that cheered Wall Street. Walmart Inc. (NYSE: WMT) has a much better online presence, and its store count advantage is overwhelming.
At first, Target’s figures looked solid, and the stock rose. However, The Wall Street Journal made the most important point about the announcement: “Target Aims for Turnaround After First Sales Decline Since 2016.” Since the quarter included the holidays, it should have been much better.
Target’s plans present a challenge. They are too ambitious. They call for opening hundreds of stores, investing in new stores, and launching a new loyalty program. It must do this in a retail jungle dominated by Walmart, Costco, and Amazon. Each reported strong results over the holidays, compared to Target’s weak ones.
For the most recently reported quarter, Target had revenue of $31.9 billion, up less than 2% from a year ago. Earnings were solid at $2.98 per share, up 57%. Same-store sales fell 4.4%. the company has almost 2,000 stores.
Compare the Target figures to Walmart’s. In the fourth fiscal quarter, Walmart’s revenue was $173.4 billion, up 5.7%. Adjusted per-share earnings rose 5% to $1.80. Target had a net income of $1.4 billion. Walmart’s was $5.5 billion. Walmart has 4,600 stores. (Check out 10 Stores Like Walmart: Best Alternatives and Affordable Options.)
Another contrast to Target is Amazon.com Inc. (NASDAQ: AMZN). Its revenue in the most recent quarter was $170 billion, on which it made $10.6 billion. The results included AWS, the company’s cloud computing business.
Target is too small to compete effectively.
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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.
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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.
