Wal-Mart vs Target: Tale of Two Retailers

There is no doubt that consumers and the economy are under a great deal of pressure. Between cash-strapped shoppers and fiscal cliff worries, there is plenty of pessimism in the market. However, there are still some stocks bucking the downtrend.

The nation’s two largest retailers reported third quarter financial results on Thursday, and investors clearly picked only one winner. Wal-Mart (NYSE:WMT) announced a profit of $3.64 billion ($1.08 per share), compared to $3.34 billion (96 cents per share) a year earlier. Earnings beat Wall Street’s estimate by one penny, but sales came in lighter than expected. Total revenue increased 3.4 percent year-over-year to $113.9 billion, missing the $114.9 billion forecast from Thomson Reuters. Furthermore, domestic same-store sales rose 1.5 percent, well below the consensus estimate of 4.6 percent.

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Sales were negatively impacted from exchange rate fluctuations, but Wal-Mart clearly pointed towards a weak economy in the report. “Price will continue to be a major factor for U.S. customers over the holidays,” explains Mike Duke, chief executive officer. “More customers are part of a growing global middle class, looking for quality, value and a better life, and our EDLP model matters to these customers.” Chief financial officer Charles Holley also notes that, “Current macroeconomic conditions continue to pressure our customers.”