I’m not going to lie, sometimes I mix-up whether I want to go to Target or Walmart because they seem like the same store. It doesn’t help that when I drive to a $TGT, there’s usually a $WMT Superstore approximately two steps away. In my mind, the two names have nearly become synonymous but the brands are far from the same as they try to compete with the internet tycoon Amazon, who controls 43 percent of all U.S. e-commerce, each brand struggling in their own unique way. For instance, $TGT’s earnings per share are down 91 cents from $1.29, with a share price decreased by 16.3 percent in the past three months, in addition to declining revenues of $15.6 billion from $16.2 billion. In same store sales, buy-side analysts expect a decline of 3.7 percent, their analysis rooted in $TGT’s grand turnaround plan that won’t make the store profitable until well into fiscal 2018. Additional pressures from comps and margin declines have prompted management to invest in a $7 billion overhaul strategy comprised of store remodels, a push for competitive pricing, and the development of quality online platforms to enhance customer convenience. $TGT also intends to launch new brands and develop flexible format stores to penetrate deeper into urban areas, emphasizing merchandise in the Style, Baby, Kids, and Wellness categories.
Comparatively, $WMT’s predicted Q1 earnings of 2018 are expected to beat estimates despite higher expenses and lower margins due to their focus on boosting consumer confidence in the brand. Their success is reflected in the positive comps $WMT has had in the U.S. for the past ten quarters, in addition to improved traffic for the ninth consecutive quarter. Augmenting their e-commerce initiatives in an effort to take-on $AMZN, the company has made three e-commerce acquisitions since the buyout of Jet.com for $3.3 billion. They’ve scooped up ModCloth and Moosejaw to beef up their fashion/apparel sector, and also acquired the men’s clothing line Bonobos in September 2016. The company is also competing with
Amazon’s Prime shipping program, which charges customer $99 a year for two-day shipping with additional features like a streaming video service. $WMT, adversely, offers two-day shipping to U.S. shoppers on a minimum order of $35 on over 2 million items without any membership fee. They also still offer ‘same-day store pickup’ on many items and ‘Online grocery Pickup’ at more than 600 locations across the country. Only time will tell which store will reign supreme, or if the $AMZN giant will crush them both.