KOA Headlines
11 21 24 Investopedia's Caleb Silver talks about Target stock price vs rival Walmart
But there's only one feeling like knowing your banker personally, like growing up with a bank you can count on, like being sure what you've earned is safe, secure, and local. There's only one feeling like knowing you're supporting your community. You deserve more from a bank. You deserve an institution that stood strong for generations. Bank of Colorado, there's only one member FDIC. It is Colorado's morning news. Marty Lenz, Gina Gondek, good morning. Target shares sank to their lowest point since last November following the retailer's earnings released yesterday, a day after Walmart shares set a new record high after the company released its third quarter report. So what's Walmart doing right or wrong or what's Target doing wrong or right, I guess, if you will. Joining us now on the KOA Common Spirit Health Hotline to talk more about it, Editor in Chief of Investopedia, it's Caleb Silver. Caleb, thank you so much for your time this morning. Our business and money editor, Pat Woodard on this interview with us as well. I mean, what are the biggest differences that we're seeing right now when it comes to these two big box retailers? Yeah, it's a tale of two retailers and Target shares falling 21% yesterday after the company reported earnings. Pretty soft, comparable sales, it's month over month sales, up to 0.3% store, comparable sales, almost down 2%. You look at Walmart on the other hand, sales are growing about 5% month over month in the same store. So what is it? It's that consumers have become a lot more price conscious. And what Target was saying was they were spending less when they were there and not buying the non-essentials. Those are the electronics, those are the toys, those are the clothes over at Walmart, which sells more groceries. They were buying a higher income, spend or a higher income consumer doing more of their shopping there. Both of them had to do steep discounts, keep people in the stores. Walmart can handle that on the gross margin side, a little bit better than Target. Now at the same time, Walmart's CFO came out the other day during their earnings report talking about the tariffs that might be coming with the incoming Trump administration. He's saying that that could raise prices for consumers, so there's a lot of concern there, isn't there? Yeah, because those prices are going to get passed right along to consumers, even though Target and Walmart both have their private label products that they try to push and sell. Higher tariffs is going to hurt everybody in terms of higher prices. Those don't get absorbed by companies, they get absorbed by us. So they know that that's coming, this is a critical fourth quarter for all retailers as we know going into the holiday shopping season. But both, especially Target, has done a lot of deep discounting. Just three months ago, the company was a little bit more optimistic raising its sales forecast, well it didn't hit those forecasts and now they've pulled back sales forecast for the fourth quarter. When you see that as an investor company pulling back their sales forecast in the most important quarter and their gross margin suffering because of the discounting, not a great sign. Caleb, is it a, would it be an overreaction by Target if they decided to discount prices more? Do you sit tight with this when they see these reports? What do they do moving forward? Well, they've got to move product, especially in the fourth quarter. So I wouldn't be surprised to see even more discounting going on right now, but it's really about the shopper and where the shopper is willing to spend. When Walmart is saying, we have higher income, $100,000 households coming in to buy more of the things that they usually buy in other places, that's a sign that we're getting tighter with our wallets and we're looking for value. We're looking for value, we're going to find it across the highway or down the road from Target right now, even if it keeps discounting its prices. Now, Target's super popular, I'm getting emails and texts as we speak from Target talking about even more discounts, so it'll do whatever it has to do to make sure it makes its quarter, but it's got to write the ship right now because it's going to get tighter for consumers going forward if we get higher tariffs. And just because inflation, although it's quieted, it is where it is. It's not like prices are going down. We don't have deflation. Yeah, Caleb, going off of that, I mean, the CEO of Target did claim that consumers are shopping carefully while they're all holding out for that best possible deal, is that truly the case, are they trying to find any way to slice it or dice it or make it sound better on their end, are consumers being a little more hesitant or maybe shopping closer to Christmas time looking for those best deals? Yeah, well, a lot of sales were pulled forward by retailers into the third quarter for the holiday shopping season, so hopefully if you're targeting, you're hoping that there's still some money in the bank for people to do some more holiday spending. I don't know, I think we've definitely become more price-conscious, and if you look at the ticket-by-ticket item at what people are buying at Target versus Walmart, you're seeing this very clear distinction, essential versus non-essentials. We're buying what we need, not what we want right now, not a great time going into holiday shopping season, which really kicks into high gear next week. Switching gears a little bit, we've got news today that the Department of Justice wants a court-ordered spin-off of Google's Chrome browser saying that that's a remedy for a Google monopoly. What's a stake here for Google and for all of the people who use the Chrome browser? Well, a spin-off could mean a bunch of different things. It could be spun off into a different company, a different publicly traded company. Just don't forget that Google is one of the biggest advertisers on the planet, the biggest advertising company, and Chrome, obviously a big part of that, since it's the default browser for so many people, will the DOJ be able to pull this off? They have about 200 huge cases in front of them, and guess what, there's going to be a new head of the DOJ in a couple of months here. I don't know if this goes all the way through or if it gets done before the Biden administration is through. It is a big threat, but we know that big tech has been under the microscope from the Department of Justice, from the Federal Trade Commission, from the European regulators, just about everywhere you look. Will that remain the same in the next two months as the administration switches over? That's going to be something to watch. If they don't have to break up, the advertising juggernaut just keeps on rolling. Editor-in-chief in Investopedia, it's Caleb Silver. Thank you, Caleb. Thank you. There's only one feeling like knowing your banker personally, like growing up with a bank you can count on, like being sure what you've earned is safe, secure, and local. There's only one feeling like knowing you're supporting your community. You deserve more from a bank. You deserve an institution that stood strong for generations. Bank of Colorado, there's only one. Member FDIC. How do you feel when you switch to Geico and save on your car insurance? It's like going to work on one Thursday morning and thinking to yourself just one more day until Friday. But then somebody in the elevator says, "Happy Friday!" Can you check your phone quickly and discover today is actually Friday? So yes, happy Friday, random stranger in the elevator. Happy Friday, indeed. Yep, switching and saving with Geico feels just like that. Get more with Geico.