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Coffee With Greta: Retail Sales Beat, Target Flops


DJIA Futures: -29 (-0.1%)

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Good morning friends!

Futures are lower as traders digest strong retail sales data against Target’s big earnings miss. 

Let’s get right to it!

October Retail Sales Jump

Retail sales rose more than expected in October as the U.S. consumer continues to pay higher prices. 

The Commerce Department reported retail sales rose 1.3% to $694.5 billion. 

That was better than economists’ expectations for a 1.2% gain. 

Retail sales jumped 8.3% year over year. 

Gasoline stations saw the largest increase with sales up 4.1% as prices rose, grocery store sales jumped 1.4%, and vehicles sales were up 1.5%. 

Core retail sales, excluding vehicles and gas stations, rose 0.9%. 

Target Tumbles As Profits Drop

Target (TGT) shares are tumbling 15.1% ahead of the open after missing Q3 expectations and warning of a weak holiday quarter.

Here’s how the retailer’s results compared to analysts’ expectations:

  • EPS: $1.54 vs $2.13 expected
  • Revenue: $26.52 billion vs $26.38 billion expected

Profit was down about 50% year over year as the company cleared excess inventory. 

Inventory was up 14% compared to Q3 2021 vs 36% in Q2 and 43% in Q1.

Target said it plans to cut up to $3 billion in total costs over the next three years. 

The company said it is planning for a weaker Q4, forecasting a low single-digit decline in comparable sales and operating margins around 3%. 

Lowe’s Beats Q3 Expectations

Lowe’s (LOW) shares are up 1.5% in premarket trade after beating Q3 estimates. 

Here’s how the home improvement retailer’s results compared to analysts’ expectations:

  • EPS: $3.27 vs $3.10 expected
  • Revenue: $23.48 billion vs $23.13 billion expected

Lowe’s reported 19% growth in its professional segment while online sales rose 12%. 

But the company did update its full-year guidance, lowering the top end of its revenue forecast to between $97 billion and $98 billion vs $99 billion previously. 

Lowe’s also expects comparable sales to be flat or down 1% vs the prior outlook for down 1% to up 1%.

Homebuilder Sentiment Expected to Slide Further

The National Association of Homebuilders releases its November sentiment index at 10:00 a.m. ET today. 

That index is expected to have fallen 2 points this month to 36. 

That extends a steep decline seen in recent months as mortgage rates have surged. 

Homebuilders have cited higher rates and continued labor and supply chain shortages for their decreased confidence. 

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