Target’s loss has been Walmart’s gain. Summer boycotts aside, U.S. consumers are showing a preference for the cheapest retail option available.
The Bentonville behemoth Walmart (WMT) reported growth in today’s earnings call at a time when many big retailers, including Target (TGT), are seeing sales move in the opposite direction.
“The key takeaway here for everybody is – maybe with a little help from Target – Walmart’s back,” explains Daniel Biolsi in this clip from The Call @ Hedgeye. “Gross margins up, sales accelerating. That’s good for Walmart.”
WMT remains on Biolsi’s “Best Idea” long list.
“[Walmart] is probably getting some wins from [the boycott] of Target,” explains Retail analyst Jeremy McLean. “In terms of what we saw with the traffic hit to Target around the boycott that started in May.” (Target was on the Hedgeye Retail team’s “Best Idea” Short list until recently.)
“When someone actually needs something, they’re going to find the best value proposition,” McLean adds, “which is going to places like HomeGoods. I think directionally that’s helping Walmart as well when people need to save money.”
HomeGoods (TJX) reported a huge 2Q acceleration yesterday for similar reasons.
Watch the full clip above.
