"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Thursday, January 6, 2011

Numerous retailers (TGT) and analysts pulled up short in December (warning: do not hug things w/horns)

You just gotta love analysts:

January 3rd Bloomberg :Target Corp., Macy’s Inc., J.C. Penney Co. and Family Dollar Stores Inc. advanced today after Citigroup Inc. recommended the shares as the economy continues to improve.  Deborah Weinswig, a retail analyst at Citigroup, said Target, the second-largest U.S. discount retailer, and the other companies will gain as “tailwinds will outweigh headwinds and translate to modest growth in spending.”

December 23, 2010 Forbes: Target Upgraded to 'Buy' at Wall Street Strategies: Retail giant Target Corp. on Wednesday caught a late-day upgrade from analysts at Wall Street Strategies.

The firm said it boosted its rating on TGT from "hold" to "buy" and raised its price target from $58 to $67. That new target implies a 12% upside to the stock's Wednesday closing price of $60.03. The analyst cited "favorable observations" on recent tours and from industry channel checks for the upgrade. Target shares were up eight cents at $60.11 in early trading Thursday.

December 21, 2010 American Banking News: analysts at Barclays Capital raised their price target on shares of Target Corp. from $65.00 to $80.00 in a research note to investors on Tuesday, December 21st. They now have an “overweight” rating on the stock.

December 5, 2010 American Banking News: Equities research analysts at Piper Jaffray (NYSE: PJC) boosted their price target on shares of Target Corp. (NYSE: TGT) from $62.00 to $66.00 in a research note to clients and investors on Friday.

And Now, A Dose of Reality
(Target closed -$4.01, Macy's closed -$1.00,
JC Penney closed -$.41 and -$1.04 since Monday)
The Wall Street Journal
By Miguel Bustillo and
Elizabeth Holmes

The holiday shopping season finished weaker than it started for store chains ranging from Target Corp. to Gap Inc., thwarting hopes that leading retailers would raise profit forecasts from strong sales.

Many retailers reported December sales Thursday that missed company or analyst estimates, with discount and teen clothing chains posting particularly lackluster results. A Thomson-Reuters index of 28 leading retailers showed sales rose 3.1% at stores open at least a year, less than the expected 3.4%.

Several apparel retailers including Wet Seal Inc. and American Eagle Outfitters Inc. lowered earnings forecasts, with some citing high promotional discounting during the holidays as a drain on profits. That stoked investor fears that store chains paid a steep price to induce consumers to shop.

Still, the 2010 Christmas period finished with the strongest retail revenue growth since 2006, according to the International Council of Shopping Centers. It estimated that sales for November and December rose 3.8% compared to the year before.

Online sales also grew 12% to $32.6 billion, according to tracking firm comScore Inc., the highest total ever, as consumers continue shifting more shopping to websites instead of physical locations.

Terry Lundgren, chief executive of Macy's, said he saw plenty of reasons for optimism. Same-store sales at the department store chain rose a robust 4.6% for November and December combined.

"We've certainly seen growth occur and, I think, the consumer gaining more confidence about their income and their spending levels," he said in an interview.

While a blizzard in the Northeast and rainstorms in California appeared to take a late-month toll, retail economists and experts said the real culprit behind the weaker December sales was an avalanche of aggressive promotions in November. Those deals enticed consumers to shop earlier than usual and raised unrealistic expectations about consumer spending for the remainder of the year.

"There was a lot of hype and expectation after November that we were out of the water, and we are not," said David Bassuk of management consultancy AlixPartners LLP. "Promotions still rule the day right now and they are so deep that they are affecting profitability."

Mr. Bassuk said he was concerned that retail chains, particularly those selling clothing, may have overbought spring merchandise after the exuberant November, setting themselves up for trouble in 2011.

Sales at Target, widely viewed as one of the year's most resurgent retailers, rose just 0.9% at stores open at least a year, well below the company's estimate of a low to mid-single-digit increase. (concensus estimate of analysts was +4%).

Chief Executive Gregg Steinhafel also warned that less profitable items made up a greater-than-expected percentage of purchases. The company maintained its earnings forecast but Target's stock still fell 6.8% on Thursday, to $54.93, down $4.01, in 4 p.m. composite trading on the New York Stock Exchange. Keep Reading

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