Brooke Thackray Target Corp TGT-N SELL Dec 05, 2024

They did a good job getting back to basics in their general merchandise, but consumables will be the real driver. He expectations for comps are low this quarter. She's interested in what they guide when they report next week, hoping for a nice 2-2.25% increase. There's a lot of room here for margin improvement. 

The US consumer remains a risk despite Target's strong performance today and their quarter. Target's number is encouraging though. He will look at them.

Delivered an amazing quarter last week after a brutal 2 years (-62%) suffering problems like too much inventory post-Covid and theft. The new CEO led the company on a rally from last October through April, but the company issued an an earnings miss in May and issued weak guidance for the next quarter. Shares plunged from a skeptical street. But shares jumped 10% last week after reporting. Target is back! They delivered 2% same-store sales growth, a beat, and the first quarter of positive comps since end-2022, even with lower comps. Also, digital sales are up and higher general traffic. They beat earnings and operating margins though lowered slightly their earnings forecast. Reasons for success: controlling theft, launching a successful loyalty program and cutting prices on 5,000 items.

Added about 1.5 years ago based on quality name that had been priced at a discount (post Covid-19 sell off). Since then, has sold shares. Believes share price is fully valued. Would invest more if share price fell. 

He expects an activist to step in, but they do food and places with scale, like Walmart and Amazon, do it better.

Trades at 10x PE and pays a 4.75% dividend yield. Has fallen and is now cheap historically.

Has been a problem child for a while and not worth the headache; there are better retailers. TGT faces a weaker consumer.

It caters to higher-income consumers than Walmart. She's long-term and patient.