NPD Group chief retail analyst Marshal Cohen on how retailers are affected by the coronavirus, and specifically misses the back-to-school shopping season, which for most was the second-largest retail period of the year.
The divide between large-box stores and the rest of the retail sector is growing ever larger as consumer spending habits change due to the COVID-19 pandemic.
As reported in The Washington Post on Wednesday, quarterly revenue released this week by major retailers revealed that consumers are spending less on food and essences and more on furniture, electronics and other items with big tickets.
TARGET TRAFFIC GROWTH FINDED SAME DAY SERVICE FUELS ONLINE SHOPPING FRENZY
Minneapolis-based retailer Target Corp. reported that profit in the second quarter increased by about 80% year-over-year to $ 1.69 billion and revenue up 25%.
Arkansas’ Walmart Inc., the nation’s largest retailer, also reported blowout revenue, with profits soaring 79% to $ 6.48 billion and total revenue up 5.4%.
Both companies were driven by an increase in online orders, driven in part by an increase in home sales as some Americans moved during the pandemic. Profits for construction supply chains such as Lowe’s and Home Depot rose 74% and 25%, respectively.
Lowe defeated all four retail companies with a 30% increase in revenue, while Home Depot saw a 23% jump.
Shoppers wear protective masks at a Target Corp. store in New York on Saturday, August 15, 2020. (Jeenah Moon / Bloomberg via Getty Images)
Profits have been far from universal, however, with Kohl’s reported revenue Kohl’s reported revenue fell just over 23% from a year ago to $ 3.41 billion.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| TGT | TARGET CORP. | 152.24 | -1.98 | -1.28% |
| WMT | WALMART INC. | 130.57 | -1.84 | -1.39% |
| HD | DE HOME DEPOT INC. | 280.68 | -2.18 | -0.77% |
| LEECH | LOWE’S COMPANIES INC. | 158.58 | +0.30 | + 0.19% |
| KSS | KOHL’S CORP. | 19.00 | -0.58 | -2.96% |
The mixed performances reflect a steep recession during the coronavirus pandemic that marked the nation’s growing class divide.
While millions of Americans rely on unemployment benefits and incentives to get by, others work from home and have the ability to flush on vacation products.
Notably, the S&P 500 rose 0.2% Tuesday to 3,389.78, hitting its previous February 19 high to end at the highest closing level on record.
Yet the one that is constant this year – even if numbers bounce back – is economic uncertainty.
Senate lawmakers have begun a break that lasts until Labor Day without reaching a two-party agreement on another incentive package – leaving many Americans in disarray.
But spending habits indicate that some can last longer than others.
As The Washington Post noted, as buyers of clothing, they buy at opposite ends of the sector spectrum.
Managers of Target Corp. said Wednesday that a rebound in clothing sales helped boost sales growth to record levels, and Walmart said federally stimulating money made a notable contribution to revenue in the last quarter.
Whether retailers can sustain this growth will depend in part on the disposable disposable income of consumers and how they use it.
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S&P notes that 424 companies with assessed debt had filed for bankruptcy in the year to August 9 – the fastest rate for filing in a decade. Vendors Neiman Marcus, J. Crew and JC Penney have all been seeking bankruptcy protection since January.
