Target (NYSE:TGT) shares gained from Walmart’s earnings report earlier today.
Brief Summary:
Today, Walmart announced results that were above expectations.
In addition, Walmart predicted a stronger second half of the year.
Tomorrow, Target (NYSE:TGT) will reveal its financial results.
What Happened?
Today, on the eve of the company’s second-quarter earnings announcement, shares of retail giant Target (NYSE:TGT) jumped by around 4.5% after rival store Walmart (NYSE:WMT) revealed better-than-expected financial results.
Reason For the Target Stock Gain
Today, Walmart (NYSE:WMT) said its adjusted profits for the most recent quarter were $1.77 on sales of $152.6 billion. The results in both categories exceeded projections made by industry experts.
In an earnings release, Walmart CEO and President Doug McMillon stated, “The steps we’ve taken to reduce inventory levels in the U.S., together with a larger mix of sales in food, placed pressure on the profit margin for Q2 and our expectation for the year.”
And he continued:
All during the quarter, we achieved significant operational progress toward our goal of reducing supply chain costs. Our overseas markets remain strong, and we continue implementing our plan to grow our digital companies.
Walmart (NYSE:WMT) also kept its forecast for the year’s second half unchanged. The corporation projected growth of around 4.5% in consolidated net sales. In contrast to previous projections, the predicted decline of 9–11 percent in consolidated adjusted operating income is more optimistic.
Since Target (NYSE:TGT) and Walmart (NYSE:WMT) are direct rivals in the same market, it stands to reason that tomorrow, when Target announces profits, investors would expect a continuation of Walmart’s success.
What Should We Do Now
According to a research report published by the Telsey Advisory Group, the company would “benefit from the strength of its grocery sector, reinforced by positive macro trends—continued at-home consumption and rising inflation.”
Analysts have warned that the retail industry is facing challenges and that the positive trends in the food sector are expected to be countered by negative trends in consumer discretionary spending. Thus, yes, I anticipate a satisfactory fiscal quarter from Target (NYSE:TGT) tomorrow, and I am also interested in hearing whether or if the company provides any new forecast.
Featured Image: Megapixl @Alexeynovikov
Author Shariq Khan 
