Wal-Mart And Target: A Tale Of 2 Discounters
"Macroeconomic conditions continue to pressure our customers," Holley said.
Meanwhile, Gregg Steinhafel, Target's chairman and president, told investors: "We feel good about our ability to deliver inspiring merchandise, most-wanted gifts, and unbeatable value, while also generating expected profitability."
The fortunes of the two retailers have changed during the economic downturn.
Wal-Mart at first fared well during the slowdown as affluent shoppers traded down to its stores. But the company eventually began to lose some of its core low-income shoppers in the process.The company, based in Bentonville, Ark., posted nine consecutive quarters of revenue declines in its U.S. namesake business as it moved away from its lowest prices strategy and got rid of thousands of basic items its core customers covet in an effort to de-clutter the stores. Wal-Mart's namesake U.S. business, which began re-emphasizing low prices and restocked shelves in 2010, reversed the decline last year. The business has recorded five consecutive quarters of gains in revenue at stores open at least a year, an indicator of a retailer's health. But its momentum has slowed. Wal-Mart said Thursday that its namesake U.S. business had a 1.5 percent increase in revenue at stores open at least a year. But the gain is short of the 1.8 percent increase Wall Street expected. It's also a slowdown in growth from the 2.2 percent gain the business posted in the second quarter and the 2.6 percent increase it had in the first quarter. Wal-Mart issued a fourth-quarter profit outlook that's below analysts' forecasts. For the quarter, it expects earnings per share to be between $1.53 and $1.58, below the $1.59 analysts expected. "It shows that its consumer is still struggling," said Ken Perkins, president of Retail Metrics, a research company. Target, based in Minneapolis, initially struggled during the economic slowdown. Its fashion-forward image hurt it during the downturn: People didn't perceive Target as having the best prices.
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