Coffee With Greta: Retail Sales Fall Flat as Gas Prices Drop
DJIA Futures: -211 (-0.6%)
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NASDAQ Futures: -115 (-0.8%)
Good morning friends!
Futures are falling after July retail sales missed expectations and Target reported a sharp drop in profits.
Let’s get right to it!
Retail Sales Fall Flat in July
U.S. retail sales were flat in July as gas prices fell and auto sales dropped.
The Commerce Department reported retail sales were unchanged last month at $682.8 billion.
That missed economists’ expectations for sales to rise 0.1%.
The flat sales came as gas station receipts tumbled 1.8% and car sales dropped 1.7%.
Excluding autos, core retail sales rose 0.4% vs expectations for no change.
That was driven by a strong 2.7% gain in online sales – boosted by Amazon Prime day – and a 1.5% gain at miscellaneous stores.
Target Drops as Profits Plunge
Target (TGT) shares are down 2.9% ahead of the open after missing profit expectations in the second quarter.
The retailer reported earnings of $0.39 per share on $26.04 billion in revenue.
That missed analysts’ expectations for EPS of $0.72 but was in line with sales estimates.
Profit was down 90% year-over-year and the CFO blamed that plunge on Target’s aggressive efforts to reduce inventory.
He said, “If we hadn’t dealt with our excess inventory head-on, we could have avoided some short-term pain on the profit line, but that would have hampered our longer-term potential. While our quarterly profit took a meaningful step down, our future path is brighter.”
The company reiterated its full-year forecast, saying it’s now positioned for a rebound after reducing extra inventory.
Lowe’s Reports Mixed Q2 Results
Lowe’s (LOW) shares are up 1.1% in premarket trade after mixed Q2 earnings.
The home improvement retailer reported adjusted earnings of $4.67 per share on $27.48 billion in revenue.
That topped analysts’ expectations for EPS of $4.58 but fell short of revenue estimates for $28.12 billion.
Comparable sales fell 0.3% year over year but home improvement sales rose 0.2%.
The CEO said the home improvement consumer remained healthy in the quarter.
“Rather than the DIY consumer trading down like you hear from some retailers, in many cases we were seeing the opposite,” he told CNBC. “The customer’s actually trading up to innovation and trading up for new.”
Lowe’s also saw an increase in sales to professionals thanks to its new loyalty programs.
The CEO said they saw double-digit growth in Pro sales for the ninth consecutive quarter.
The company said it now expects full-year total and comparable sales toward the bottom of its previous outlook range while earnings are expected to be at the top end.
Meme Stock Rally Continues
Bed Bath & Beyond (BBBY) shares are surging 37.9% ahead of the open after surging 29.1% on Tuesday.
The recent jump comes after a regulatory filing showed GameStop (GME) Ryan Cohen purchased call options on BBBY through his venture capital firm.
Retail traders poured into the stock, with shares soaring as much as 70% on Tuesday.
Cohen purchased call options on more than 1.6 million Bed Bath & Beyond shares with strike prices between $60 and $80.
The options expire in January 2023.
That means Cohen is betting the stock can rise as high as $80 by that time.
BBBY closed at $20.65 per share on Tuesday.
Oil Prices Fall to 6-Month Low
Oil prices are hovering around 6-month lows today as recession fears weigh on the market.
West Texas Intermediate crude futures are flat at $86.50 bbl while Brent crude futures are down 0.4% at $92 bbl.
The fears of a global recession are outweighing new data that showed a drop in U.S. crude and gasoline stocks.
The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 448,000 barrels last week vs expectations for a 117,000 barrel drop.
Gasoline stockpiles fell by 4.48 million barrels.
The Energy Information Administration reports official supply levels today.
Analysts expect the EIA to show both crude and gasoline inventories fell by 1.7 million barrels last week.
In Case You Missed It
- President Biden signed the $437 billion Inflation Reduction Act into law Tuesday afternoon. The tax, health, and climate legislation accomplishes several agenda items laid out in his Build Back Better plan. The bill imposes a 15% minimum corporate tax rate and includes $369 billion in funding for climate and energy policies. The legislation was approved along party lines in both chambers of Congress.