Retail earnings: Hits, misses, and surprises

We break down earnings from Target and Lowe’s, as well discuss the state of the consumer.

Transcript

00:00Christine, who's better positioned in home improvement to weather the deferral mindset, Home Depot or Lowe's?

00:07I'm going to go with Lowe's just based on results out today and their acquisitions within the home professional space

00:14where they see a potential to offset some of the weakness in home buyers and home improvement.

00:21Home professionals are a little more lucrative.

00:24It's a little more of a steady space, and they've had a couple of big acquisitions in that space.

00:30Okay, bigger threat to margins, tariffs or inflation?

00:35Ooh, that's a good one.

00:36It's hard to say with tariffs because we're not quite sure what's going to happen.

00:42Inflation is steadily improving in some areas, but as you saw with, of course, EPI the other week, it's still quite hot.

00:49For now, I'm going to go with tariffs.

00:52It's one of the number one mentioned negative impacts within the retail reports last season and so far this season.

01:00Consumer spending trends holding up or weakening?

01:06I think they've been softening for some time, but given all the headwinds, I'm actually surprised at how resilient the consumer has been.

01:16Most surprising earnings call so far?

01:18To be honest, I think Target was a little bit surprising because it wasn't as bad as we expected.

01:25They did surprise to the upside.

01:27Everyone was expecting that to just – I know investors still aren't happy with that report,

01:32but if you dig down, there were actually segments that did better in the second quarter than they did in the first.

01:37They beat on the top and the bottom line.

01:39They beat on same-store sales.

01:41So I think we were all expecting that one maybe to be a little worse than it ended up coming in.