This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Target for the Bears

Stocks in this article: TGT WMT HD LOW KSS COST

NEW YORK ( TheStreet) -- Retailers across all sectors are finding it increasingly more difficult to get customers to come in their stores. When customers do arrive, there is also the challenge of getting them to spend money.

Unfortunately, Target (TGT) has fallen short in both categories.

Although rival Wal-Mart (WMT) has faced similar challenges, Wal-Mart has figured out ways to offset weakening sales and softer comps. Making matter worse is Target's management has issued meager guidance, which has resulted in several analyst downgrades.

At this point, Target investors are unsure of what to make of the stock. Management has not been able to quickly respond. But unless management figures out from where Target's next leg of growth is going to come, this stock may become target practice for the bears for the foreseeable future.

Target has always proven to be an extraordinarily smart company by the way it has been able to appeal to both the frugal shopper and those with an appetite for the "upscale high-end" category. This model has benefited the company while Target still held true to its strategy of offering great products at discounted prices.

It seems, however, that this advantage is now slowly evaporating as there wasn't much to like in the company's recent earnings report. Sales were up half of 1% to $16.6 billion. As with other large retail chains such as Lowe's (LOW), which recently reported flat sales and weak comps, Target attributed the weaker sales (in part) to adverse weather.

Interestingly, rival Home Depot (HD), which posted 7% increase in sales to go along with a 4.3% growth in comps, reported no such concerns. While I do believe that weather can have an adverse impact of retail traffic, the relative performances of peers makes this reason hard to grasp.

Comps, or same-store-sales, is the metric that tracks the sales performance of stores that have been opened at least one year. Target posted a 60-basis-point decline in that category. It's not a great number. But I'm willing to give management credit here for outperforming Wal-Mart, which posted 1.4% decline.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs