Coffee With Greta: More Retail Results
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DJIA Futures: -40 (-0.1%)
SPX Futures: -5 (-0.1%)
NASDAQ Futures: -21 (-0.1%)
Good morning friends!
Futures are slightly lower as traders digest the latest batch of earnings.
Let’s get right to it!
Target Jumps Despite Slashing Forecast
Target (TGT) shares are up 6.5% ahead of the open despite reporting mixed Q2 results and cutting its full-year outlook.
Here’s how the retailer’s results compared to analysts’ estimates:
- EPS: $1.80 vs $1.39 expected
- Revenue: $24.77 billion vs $25.16 billion expected
The market seems focused on the profit beat and improving inventory levels.
Total revenue was down 5% year over year and comparable sales dropped 5.4% vs a 3.7% drop expected.
The CEO said sales softened in the second half of May into June before rebounding in July.
Inventory was down 17% compared to a year ago, including a 25% drop in discretionary categories.
Target now expects comparable sales to decline by mid single digits for the full fiscal year and EPS between $7 and $8 vs $7.75 to $8.75 previously.
TJX Jumps After Earnings
TJX Companies (TJX) shares are 2.1% higher in premarket trading after beating Q2 expectations and hiking its guidance.
Here’s how the discount retailer’s results compared to analysts’ estimates:
- Adjusted EPS: $0.85 vs $0.77 expected
- Revenue: $12.8 billion vs $12.5 billion expected
TJX hiked its full-year outlook now expecting adjusted EPS to range between $3.56 and $3.62 vs $3.39 to $3.48 previously.
Analysts expected full-year adjusted earnings of $3.59 per share.
TJX forecast Q3 EPS between $0.95 and $0.98 and Q4 EPS between $1 and $1.03.
Cava’s First Earnings Report
Cava (CAVA) shares are rallying 9.1% ahead of the open after reporting a profit in its first earnings release after IPO.
Here’s how the Mediterranean restaurant chain’s results compared to analysts’ estimates:
- EPS: $0.21
- Revenue: $172.9 million vs $163 million expected
Net sales soared 62% and Cava said it opened 16 new restaurants during the quarter.
Same-store sales were up 18.2% and traffic grew 10.3%.
Cava’s menu prices were up 8% year over year but the company said it does not plan to raise prices further.
The company forecast full-year same-store sales growth of between 13% and 15% and adjusted EBITDA of $62 million to $67 million.
Cava plans to open 65 to 70 new locations this year.
Home Building Rebounds
New home construction rebounded in July.
The Census Bureau reported housing starts jumped 3.9% from June to a seasonally adjusted annual rate of 1.45 million units.
That was in line with expectations and up 5.9% year over year.
Single-family starts jumped 6.7% monthly and multi-family starts were unchanged.
Building permits issued rose just 0.1% monthly to a seasonally adjusted annual rate of 1.44 million units vs 1.47 million expected.
Permits were down 13% year over year.
Single-family permits rose 0.6% monthly while multi-family permits dropped 0.2%.
Mortgage Demand Drops
Mortgage demand dropped last week as rates pushed higher.
The Mortgage Bankers Association reported total application volume was 29% lower year over year.
Purchase applications were unchanged weekly and 26% lower than a year ago.
Refinance application fell 2% weekly and 35% year over year.
The drop came as the average 30-year fixed contract rate rose to 7.16% from 7.09%.
That was the third straight weekly increase and the highest since October 2022.
But applications for a mortgage to purchase a newly built home jumped 35.5% year over year.
The FHA share of those applications hit the highest level since May 2020, indicating more first-time buyers are turning to new construction amid the lack of existing inventory.
In Case You Missed It
- Homebuilder sentiment fell unexpectedly this month as mortgage rates surge. The National Association of Homebuilders sentiment index dropped 6 points in August to 50 vs expectations for 57. It was the first decline in seven months and the lowest reading since May. Sentiment about current sales conditions fell 5 points to 57, buyer traffic dropped 6 points to 34, and 6-month sales expectations fell 4 points to 55. The share of builders cutting prices in August rose to 25% vs 22% in July and the average price cut remained at 6%.