Markets
TGT

How These 3 Discount Retailers Fared The Holiday Season

An image of a smartphone and a pen
Credit: Shutterstock photo

Although the holiday season turned out to be a blissful one for some retailers, there were others that did not fare well. Notably, a robust consumer environment on account of strong job picture, higher disposable income and improved consumer confidence worked in favor of retailers. However, stiff competition from e-commerce players such as Amazon AMZN and a persistent struggle to cope up with rapidly changing consumer trends might have taken a toll on the performance of some retailers.

In fact, Americans were in the mood to spend, as retail sales from Nov 1 through Dec 24 increased 5.1% to more than $850 billion, per a report from Mastercard SpendingPulse. Let's take a closer look at the performances of the three discount retailers during the festive season - Target TGT , Costco COST and PriceSmart PSMT .

Target Posts Solid Holiday Comps

Target joined the bandwagon of retailers that have witnessed strong holiday season sales. Comparable sales for this general merchandise retailer rose 5.7% in the combined November/December period buoyed by robust traffic, favorable store comps and a surge of 29% in comparable digital sales. Markedly, comps grew across all five key merchandise categories, with Toys, Baby and Seasonal Gift products witnessing exceptional growth.

Notably, Store Pickup plus Drive Up soared more than 60% year over year, and formed nearly 25% of Target's digital sales during the reported period. In fact, management anticipates 2018 to be the company's fifth straight year to showcase digital sales growth of more than 25%.

Target is trying all means to rapidly adapt to the changes in the retail ecosystem, which is increasingly inclining toward digitalization. Initiatives such as the development of omni-channel capacities, coming up with new brands, remodeling or refurbishment of stores, and expansion of same-day delivery options bode well for this Zacks Rank #3 (Hold) company. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Costco Reports Decent Comps Performance

Costco has been also a beneficiary of a favorable retail environment. The company's better price management, strong membership trends and increasing penetration of e-commerce business are also leading to impressive comparable sales run that may continue in 2019. In fact, its strategy of selling products at heavily discounted prices has helped this Zacks Rank #3 company to remain on growth track.

This operator of membership warehouses continued with its decent comparable sales trend in the month of November as well December, which is the most crucial part of the year for retailers. Comparable sales rose 9.2% and 6.1% during November and December period, respectively. Meanwhile, comparable e-commerce sales for the respective months surged 46.1% and 13.6%.

PriceSmart Did Not Fare Well

PriceSmart, which owns and operates membership shopping warehouse clubs, registered net merchandise sales increase of 0.9% during the month of December, which follows a decline of 1% in the preceding month. We note that comparable net merchandise sales of this San Diego, CA-based company jumped 0.4% in December following a decline of 2.8% in the month of November.

Further, this Zacks Rank #3 company recently came out with first-quarter fiscal 2019 results, wherein earnings of 69 cents a share outpaced the Zacks Consensus Estimate of 52 cents. However, the bottom line declined 6.8% on a year-over-year basis owing to costs related with Aeropost and omni-channel development initiatives. Total sales grew 1.6% to $779.6 million but fell short of the Zacks Consensus Estimate of $795 million.

We note that shares of Target, Costco and PriceSmart have gained 6.1%, 4.4% and 4.7%, respectively, compared with the industry 's growth of 7.2% in a month.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

TGT COST PSMT AMZN

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More