Target and Walmart's quarterly results underscore how the two big-box retailer's performances have diverged.
Customer traffic gains were similar at the two stores, yet Walmart's sales trends looked much better than Target's. Walmart's traffic growth edged out its rival's, with a gain of 3.1% at Walmart U.S. versus 2.4% at Target. Walmart's same-store sales rose 5.3%, while Target's increased only 0.3% year over year. Walmart's e-commerce sales in the U.S. rose 22%, a bigger increase than the nearly 11% at Target.
Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weekly One of the roots of Target's troubles is the company's merchandise mix, said Kate McShane, a retail analyst for Goldman Sachs. About 60% of Target's sales come from discretionary items, such as home goods and clothing. That's the opposite of Walmart, which draws about 60% of its sales from everyday necessities, such as groceries and household items like paper towels.
On a call with investors on Wednesday, Cornell pointed to"green shoots" in the business, even as sales results disappointed. He spoke about customer traffic growth, online sales gains and relative strength in apparel sales, even as unseasonably warm weather kept shoppers from buying clothes for cooler temperatures.