The Long Term Investor

HERE is some of the POSITIVE general economic news today to add to the good earnings.

U.S. retail sales accelerate in strong boost to economy

https://finance.yahoo.com/news/u-retail-sales-beat-expectations-134034903.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (Reuters) - U.S. retail sales surged in October, likely as Americans started their holiday shopping early to avoid empty shelves amid shortages of some goods because of the ongoing pandemic, giving the economy a lift at the start of the fourth quarter.

The solid report from the Commerce Department on Tuesday suggested high inflation was not yet dampening spending, and added to strong employment growth in October and an acceleration in services sector activity in painting an upbeat picture of the economy after it grew at its slowest pace in more than a year in the third quarter.

"Strong gains in employment, wages and wealth, as well as elevated savings for many households, have more than compensated for inflation's hit to spending power," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "For now, both consumers and the economy, in aggregate, look to cap the year on a high note."

Retail sales jumped 1.7% last month after increasing 0.8% in September. Sales have now risen for three straight months. Economists polled by Reuters had forecast retail sales advancing 1.4%. Sales soared 16.3% year-on-year in October.

The broad increase in sales was led by motor vehicles, with receipts at auto dealerships advancing 1.8% after gaining 1.2% in September. The rise reflects an increase in unit sales as well as higher prices. Unit motor vehicle sales rose in October for the first time in six months.

The tight supply of automobiles because of a global semiconductor shortage has driven up motor vehicle prices.

BROAD GAINS

Retail sales also received a boost from higher gasoline prices, with receipts at service stations increasing 3.9%. Consumer prices soared 0.9% in October. Shortages probably led consumers to anticipate even higher prices and encouraged them to shop early. Online retail sales rebounded 4.0%.

Receipts at building material stores advanced 2.8% and furniture outlets sales rose 0.4%. There was also an increase in receipts at sporting goods, hobby, musical instrument and book stores. Sales at electronics and appliance stores rebounded 3.8%. But sales at clothing stores fell 0.7%.

Sales at restaurants and bars were unchanged despite an ebb in COVID-19 infections, driven by the Delta variant. Restaurants and bars are the only services category in the retail sales report. The nearly two-year long coronavirus pandemic has caused an acute shortage of labor, delaying deliveries of raw materials to factories as well as shipments of finished goods to markets.

Excluding automobiles, gasoline, building materials and food services, retail sales shot up 1.6% last month after increasing 0.5% in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Retail sales are mostly made up of goods, with services, including healthcare, education and hotel accommodation, making up the remaining portion of consumer spending.

Even when adjusted for inflation, retail sales rose solidly last month, leaving the pace of growth in consumer spending above the meager 1.6% annualized rate logged in the third quarter. The fading headwind from a surge in coronavirus infections over the summer is reviving economic activity. The economy grew at a 2.0% rate last quarter.

Hiring has been accompanied by an acceleration in wages as companies scramble to fill 10.4 million open jobs as of the end of September. But high inflation is wiping out those gains for some workers, which helped to sink consumer sentiment to a 10-year low in early November.

Still, economists do not believe the tumble in sentiment reported by the University of Michigan last Friday will undermine consumer spending, noting that other sentiment measures were above early-pandemic lows. Americans amassed at least $2 trillion in excess savings during the pandemic.

"This continuing weakness in confidence does not warrant any immediate change to our near-term forecast for consumer spending since other factors are more important, particularly real disposable income, which is holding steady at a high level," said Scott Hoyt, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "Support also comes from strong job growth, plentiful jobs, and abundant available cash for many.""

MY COMMENT

YES......every once in a while REALITY pokes a hole in all the negativity and fear mongering that you see every day. Inflation? Supply chain? NO and NO.......not impacting much at all when you get down to it. In fact we have been living with these issues for at least SIX MONTHS. The media LOVES these stories but investors........at least "ME".....moved on long ago.

 

Being a fundamental BIG CAP GROWTH investor......I dont rely at all on any economic indicator.

Look Beyond ‘Bellwethers’
No single data series is likely to tell you all you need to know about where the economy may be heading.

https://www.fisherinvestments.com/en-us/marketminder/look-beyond-bellwethers

(BOLD is my opinion OR what I consider important content)

"Where is the economy headed next? That is a tough question to answer even during “normal” times, and considering supply bottlenecks and the pandemic, the task looks even harder now. It seems to have many experts turning over lots of stones, with some convinced certain economic indicators are bellwethers. But we caution investors against reading too much into any one data series—they all have their limitations, regardless of the economic environment.

Economic bellwethers are supposedly the canary in the coalmine—as they go, so goes the economy. Copper prices are one popular example. Since copper has a wide range of uses, from plumbing to electric cars, many view prices as a proxy for broad economic growth. Rising prices imply demand for goods is purportedly strong. Falling prices suggest the opposite, leading some to believe it shows the economy will soon slow, too. Some think auto sales reflect consumers’ willingness to spend on big-ticket items, so weak sales portend broad weakness. Others zero in on home sales, which they see as a sign of household formation and a key consumption driver. In today’s environment, analysts have explored alternative indicators to divine the economy’s health. For example, some study hospitality hiring trends to determine whether the pandemic’s economic impact is waxing or waning. While the rationale behind some of today’s bellwethers seems logical, we think it is important to dive deeper.

Take the semiconductor industry. A recent Bloomberg article noted that despite the widespread shortage of memory chips, prices have fallen over the past couple months. With several semiconductor companies reporting slowing customer orders and reduced economic outlooks, the concern seems to be that hardware producers see weaker demand for laptops, mobile phones and the like. Since chips feature in a vast array of consumer products, many argue falling chip demand may be a harbinger of a broader slowdown outside the world of gadgets, too.

However, semiconductors aren’t a leading indicator, in our view. Chips are cyclical and behave like commodities. Rising demand lifts prices and incentivizes production, but it takes time for investments to boost output. In semiconductors’ case, new foundries to create chips take years to come online—which puts a lid on supply in the near term.

On the demand side, while some chip producers have noted slowing orders, that doesn’t appear to be an industry-wide development. Those who make cars, video game consoles and smart phones have all reduced production targets due to a scarcity of chips, not flagging consumer demand. Prices of—and demand for—graphics chips, which feature in more high-end and complex electronics, remain firm. Companies who make semiconductor equipment have reported record revenues and expect business to remain strong for the foreseeable future.

Note, too, falling prices may reflect today’s chip shortages easing to an extent as supply improves. Semiconductor producers have been investing big to increase supply—according to tech-market researcher Gartner Inc., the global semiconductor industry is projected to spend about $146 billion in capital expenditures this year, about 50% higher than 2019’s pre-pandemic spending.[ii] Some short-term headwinds that hindered production at semiconductor plants this year—e.g., winter storms in Texas and a June fire in Japan—have also passed. Anecdotally, some auto industry executives shared optimism that semiconductor supply is improving, though constraints may persist to varying degrees for a while.[iii]

Beyond chip prices, some analysts have treated high-frequency data series as bellwethers in today’s economy. Since the pandemic’s onset, many have looked to alternative indicators—e.g., hotel occupancy rates, airline passenger volumes and weekly restaurant bookings—as economic harbingers, especially in the harder-to-measure services sector. As reopening plans progressed, other less-conventional metrics have gained attention, from office occupancy rates to job postings for “close contact” positions (e.g., dental or child-care). Some research outfits and financial publications have even created indexes aggregating real-time statistics to track the economic recovery.

Such datasets were useful for a stretch, in our view, early in 2020. But their utility faded as more folks looked to them. In addition, they have limitations. Quarterly and monthly economic series can be volatile, and weekly and daily reports are subject to even more noise—making it trickier to decipher trends. Many real-time economic stats aren’t seasonally adjusted, even though the time of year could introduce big skew. Consider TSA checkpoint numbers, which would likely be higher during the holidays and other popular travel periods. Moreover, many of these indicators go back only a couple years, and some began in response to the pandemic. That makes it hard to conclude they reveal anything about the economy without at least a full cycle’s worth of history. These snapshots may provide some insight on a narrow topic, but we don’t think they are all-revealing.

Most of these indicators are also backward-looking, which won’t tell you anything about the economy’s direction, let alone stocks. So if you want to check the economy’s temperature, we think it is better to check forward-looking indicators. They don’t directly predict stocks, either, but they do hint at economic drivers over the foreseeable future. To that end, the new orders subcomponent of purchasing managers’ indexes (PMIs) for major developed economies show strong demand, although today’s supply shortages have likely skewed that signal to an extent, sapping its predictive power right now. However, the global yield curve is positively slopped, a positive sign for bank lending, but not too steep that it would enable fast money creation and overheating. The Conference Board’s Leading Economic Indexes (LEI)—which aggregate interest rate spreads, credit data, manufacturing PMI new orders and other data—for the US, eurozone and UK continue rising, suggesting growth is likely in the near future. However, all these indicators have their limits even in a “normal” economic environment. In our view, this reinforces an important lesson for investors: No silver bullet exists in the economic forecasting realm, so beware reading too much into any touted economic bellwether."

MY COMMENT

I REALLY dont care what the current or near term economy is doing. ALL I care about is the performance of the investments that I hold over the long term. The general economy......for the most part....has no role in stock performance. I have invested through many periods of a rising economy and many periods of a falling economy......as a long term investor in specific companies.....I just DONT CARE.

The more you focus on the economy......the more likely it is that the average investor will get shaken out of the market or turn to market timing. BOTH of these are the path to investing FAILURE.

 

GET ready for a new head to the FED. My view is that the government will ditch Powell for a more....."acceptable".....person to lead the FED. It is likely that the person selected will be much more of a dove when it comes to printing and injecting money and raising rates. In fact....it is likely that the new person will be MUCH more "political". What I FEAR is that SHE will get caught up in fighting inflation.....and.....end up TANKING the economy and throwing us into a UNNECESSARY RECESSION.

BUT.....since us regular investors have no input or say into what happens.....we will just have to live with it. Same with the businesses that we invest in.

I continue to be fully invested for the long term as usual.

 

WELL.....so far today....with my reading....I have not looked at how the markets are doing. SO.....I just looked. I am surprised that the major averages are all green at the moment. I expected the markets to be mixed.

 

The economic and earnings news lately is MOSTLY very strong and very positive. HERE is more of the same.

U.S. manufacturing output races to 2-1/2-year high

https://finance.yahoo.com/news/u-manufacturing-output-races-2-150551699.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (Reuters) - Production at U.S. factories rebounded more than expected in October as the drag from Hurricane Ida faded and motor vehicle output picked up, but manufacturing continues to be constrained by shortages of raw materials and labor.

Manufacturing output surged 1.2% last month to its highest level since March 2019, after falling 0.7% in September, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast manufacturing production rising 0.7%.

Output increased 4.5% compared to October 2020. Manufacturing, which accounts for 12% of the U.S. economy, is being underpinned by businesses desperate to rebuild depleted inventories.

Spending shifted to goods from services over the course of the COVID-19 pandemic, straining global supply chains. Raw materials such semiconductors are in short supply. Workers are also scarce, hampering the delivery of materials to factories as well as the shipment of finished goods to markets.

Even with spending rotating back to services as coronavirus infections driven by the Delta variant subside, demand for goods remains strong.

Production at auto plants rebounded 11.0% last month after declining for two straight months. Excluding autos, manufacturing output rose 0.6% in October.

Consumer goods production rebounded 1.4%. But machinery production dropped 1.3% because of an ongoing strike at John Deere. Last month's jump in manufacturing output combined with a 4.1% rebound in mining and a 1.2% rise in utilities to boost industrial production by 1.6%. That followed a 1.3% drop in September.

Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, increased 0.9 percentage point in October to 76.7%, the highest since January 2019. Overall capacity use for the industrial sector rose to 76.4% from 75.2% in September. It is 3.2 percentage points below its 1972-2020 average.

Officials at the Fed tend to look at capacity use measures for signals of how much "slack" remains in the economy — how far growth has room to run before it becomes inflationary."

MY COMMENT

The GOOD news just continues to pile up as we BEGIN the re-opening. If this keeps up we will be in for a BOOMING 2022 for investors.

 

My quarterly BUG SPRAY guy is on the way.......so.....I will go and let the markets just do their thing.

 

I had a moment to check my account for the first time today. A BIG gain so far. ALL ten stocks in the green. the economic and earnings news today has been EXCEPTIONAL. If this keeps up for the rest of the week....along with the kick off to holiday shopping next week.....we might see the start of a nice prolonged SANTA RALLY. OPERATIVE word being....."might".

 

Here is how the markets are being DRIVEN today.

Stock market news live updates: Stocks rise after strong retail sales, Walmart and Home Depot earnings

https://finance.yahoo.com/news/stock-market-news-live-updates-november-16-2021-231930362.html

(BOLD is my opinion OR what I consider important content)

"Stocks gained on Tuesday, with traders digesting key new economic data on the state of the consumer after a couple of major retailers topped quarterly earnings results.

New monthly retail sales data from the Commerce Department showed better-than-expected consumer spending trends heading into the holiday season. The total value of U.S. retail sales rose by 1.7% in October compared to September, topping expectations for a 1.4% rise, according to Bloomberg consensus data. The print was closely watched as an indicator of overall economic strength, given consumption comprises about two-thirds of U.S. economic activity.

Earnings results from retail juggernaut Walmart (WMT) further underscored solid shopping trends among American consumers. The company's closely watched U.S. comparable same-store sales grew 9.2% over last year in the third quarter, and by 15.6% compared to the same period in 2019, to exceed estimates for growth of 7%, according to Bloomberg consensus data. E-commerce sales also held up and grew by a better-than-expected 8%, compared to the 1.9% rise expected, even as more consumers returned to in-person shopping.

Home Depot (HD), meanwhile, also posted better-than-expected sales and earnings results as the company continued to see "elevated home improvement demand," CEO Craig Menear said in Home Depot's earnings statement. Comparable sales grew 6.1% compared to the 1.5% rise anticipated.

These reports came at the tail end of what has already been an exceptionally strong earnings season. As of Friday, 92% of S&P 500 companies had reported actual results, and of these, 81% of them had reported better-than-expected earnings results, according to FactSet.

The slew of better-than-expected corporate profits, coupled with still-accommodative monetary policy support, have helped power stocks to record highs throughout the year, and pushed the S&P 500 up by nearly 25% so far in 2021. These factors have also helped investors continue to push through concerns over persistently elevated inflation — though the stickiness of these rising prices remains a closely watched risk for investors.

“We have a stock market that’s been on an absolute tear despite high inflation,” Michael Darda, MKM Partners chief economist, told Yahoo Finance Live. “That’s not aways been the case historically but it has this time around, and I think for a set of very specific reasons.”

“One is that market interest rates are still extremely low on a historical basis, even though they’re up year-to-date from where they were in January,” he said. “Liquidity levels are high and companies have a lot of pricing power, so profits have been very strong despite those high inflation readings. That doesn’t necessarily mean the market is going to continue to soar on a go-forward basis. I think it’s really going to come down to the future path of market interest rates and how the Fed maneuvers moving forward, because they will be moving into a tightening cycle probably before many forecasters assumed that they would.”

10:15 a.m. ET: U.S. manufacturing production reached highest level since March 2019 despite supply chain disruptions
U.S. manufacturing production surged by 1.2% to reach its highest level since early 2019 in October as the goods-producing sector rebounded from impacts related to Hurricane Ida in late summer.

The increase, which was posted in a monthly report from the Federal Reserve, was biggest than the 0.9% rise expected, and marked a recovery from September's 0.7% drop in manufacturing production.

Industrial production, a broader measure that includes output at mine sand utilities, was also up by a greater than expected 1.6% in October, or nearly double the 0.9% rise anticipated for the month."

MY COMMENT

We have seen GREAT earnings this time around. FAR better than predicted. As stated above:

"As of Friday, 92% of S&P 500 companies had reported actual results, and of these, 81% of them had reported better-than-expected earnings results"

It has been a BANNER YEAR for investors. In fact the time span from March of 2009 to today.....has been an EPIC BULL MARKET. Being a long term investor that is fully invested all the time.....I have captured that ENTIRE GAIN. So....we now have 12 years of HISTORIC BULL MARKET. I feel sorry for all the young investors that think this type of market is NORMAL......it is NOT. BUT.....what is NORMAL is the POWER of long term investing and the gains that can be achieved with a long term horizan and REALISTIC, RATIONAL, thinking.

 

WOW.....that was a very POWERFUL market day today. It did not matter what else was going on.....the economic news and earnings news along with the general direction of the markets just DROVE the averages UP today.

By the time everything settled yesterday I lost less than $500. TODAY......very different......a BIG green day. PLUS.....I got a very solid beat on the SP500 by 0.81% today.

 

Ok....what about tomorrow? WELL......it will all be earnings driven once again. We will have TARGET and LOWE'S report before the bell. If today is any indication BOTH will BEAT expectations.

The BIG wildcard tomorrow will be the NVIDIA earnings which will come after the close. The anticipation of the NVIDIA earnings might cause some market skittishness during the day tomorrow. I have no clue what the expectations are for the NVIDIA earnings.....I simply dont usually read that sort of prediction stuff.

If all three companies strongly BEAT tomorrow......we will have a very nice shot at a week long RALLY.

 

HERE is a nice recap of the markets today......my Home Depot was up today by more than 5% on the strong earnings.

US STOCKS-Wall Street rises on retail optimism around holiday season

https://finance.yahoo.com/news/us-stocks-wall-street-rises-152004467.html

(BOLD is my opinion OR what I consider important content)

"Nov 16 (Reuters) - Consumer stocks drove the S&P 500 and the Dow higher on Tuesday as Walmart forecast a strong holiday quarter and monthly retail sales beat expectations, while losses in major technology stocks held back gains on the Nasdaq.

Data showed retail sales rose in October as Americans appeared to have started holiday shopping early to avoid empty shelves amid supply chain concerns, giving the economy a lift at the start of the fourth quarter.

The S&P consumer discretionary sector rose 0.9% and was among the top performers in early trading.

Walmart, the country's largest brick-and-mortar retailer, raised its annual sales and profit forecasts. But its shares fell 1.9% as supply chain woes hit its third-quarter margins.

Retailer Home Depot Inc jumped 4% to a record high after beating quarterly same-store sales estimates.

"It is crystal clear that inflation is not standing in the way of consumers... this could serve as the vote of confidence signaling that the economy is still chugging along nicely," said Mike Loewengart , managing director, investment strategy at E*TRADE Financial.

The positive retail data helped investors look past comments from Federal Reserve member James Bullard, who called for a more hawkish stance by the central bank in response to rising inflation.

"If the Fed decreased their purchases then it would create the potential for a rate hike sooner than mid-next year but today's data doesn't lean in that direction," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.

Investors have also been fretting over President Joe Biden's pick for Federal Reserve chair as Chair Jerome Powell's term is set to end in February 2022.

Wall Street has been trading flat over the past few days on concerns over rising inflation and the prospect of slowing economic growth. Analysts at major Wall Street banks have also grown somewhat lukewarm on the S&P 500's prospects in 2022.

However, a Bank of America survey showed investors were keen on ending 2021 in a risk-on mood.

At 10:01 a.m. ET, the Dow Jones Industrial Average was up 171.63 points, or 0.48%, at 36,259.08, the S&P 500 was up 14.42 points, or 0.31%, at 4,697.22. The Nasdaq Composite was up 31.58 points, or 0.20%, at 15,885.42.

Nvidia fell 0.4% after the UK ordered an in-depth probe of the chipmaker's planned $50 billion-plus acquisition of chip designer Arm.

Gains in the Nasdaq were also held back by losses in major technology firms.

U.S.-listed Chinese stocks and other China-exposed sectors rose on optimism over talks between President Joe Biden and Chinese leader Xi Jinping.

Electric-car maker Tesla Inc rose 2.3%, even as CEO Elon Musk sold $930 million in shares to meet tax withholding obligations related to the exercise of stock options. The stock had tumbled around 13% after Musk began selling shares last week.

JPMorgan Chase & Co also sued Tesla for $162.2 million over a breach of contract related to stock warrants."

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.56-to-1 ratio on the Nasdaq.

The S&P index recorded 32 new 52-week highs and two new lows, while the Nasdaq recorded 58 new highs and 105 new lows. "

MY COMMENT

I will post this....but it appears that it is from earlier in the day.

We CONTINUE to participate in a MASSIVELY positive market. Here are the earnings results as of last Friday:

"92% of S&P 500 companies had reported actual results, and of these, 81% of them had reported better-than-expected earnings results."

ANYONE remember a month or two ago when all the........so called experts......were predicting a weak earnings release this time around? NOW....they are all PRETENDING like the STRONG earnings are exactly what they expected.

 

So.......the Christmas/Holiday shopping season. My take......we will see BIG numbers this year. People will be ready to spend some money and have a nice celebration. The shopping will happen the same as usual......with strong increases for on-line purchases. Some will shop early due to fear of the supply chain.....but....most will shop the same way they always shop.

 

I walked into a local grocery store today and got my COVID booster at the pharmacy.....Moderna. So far....so good......but....it has only been 3 hours. So far ZERO symptoms....not even a sore arm. Good thing I typed this......I just remembered that I still have a band-aid on that arm.

 

OMG......a loss of $17.61. SEE......everyone tried to tell you that long term investing did not work. BUT NOOOOOOO.....you did not listen. OH......the humanity of it. What a disaster.

 

CONTRARY....to the averages I am nicely green at the moment. Nvidia is my largest down stock today. I am seeing 7 stocks UP and 3 DOWN at this moment. I still have HOPE for the day.

BUT....we appear to be experiencing a NVIDIA PAUSE in the markets. My view is there is little excitement in the markets today and many short term traders are waiting for the Nvidia earnings after the close today. So....it is the pause that refreshes. We will see if the INHERENT market strength can overcome this little bit of complacent weakness today and push prices higher toward the close.

 

WOW....oldmanram....what a day. Glad that in the end the impact was minimal. Stay safe up there.

 

Here are the earnings that are in focus so far today.

Target tops earnings estimates, but shares fall as retailer focuses on keeping customer prices low

https://www.cnbc.com/2021/11/17/target-tgt-q3-2021earnings.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Target topped earnings for the fiscal third quarter, as seasonal moments like Halloween and back-to-school boosted sales.
• The retailer raised its forecast, saying that comparable sales could rise at between a high single-digit and low double-digit pace in the holiday period.
• CEO Brian Cornell said the company is focused on value as prices of food, gas and more rise, and consumers face sticker shock.

Target shares fell Wednesday, as the big-box retailer opted to emphasize its focus on value as prices of groceries, fuel and other goods rise.

The stock was down more than 5% early Wednesday, despite beating earnings expectations for the fiscal third quarter.

Target CEO Brian Cornell said on a call with reporters that the company is absorbing some of the higher costs it’s seeing, rather than passing them on to customers. That strategy could squeeze margins.

“We are protecting prices,” he said. “It’s as important to our guests this year as safety has been throughout the pandemic.”

Target Chief Growth Officer Christina Hennington acknowledged pressure on the retailer’s margins on an earnings call as the retailer tries to move inventory quickly, despite supply chain challenges. She described that as “an appropriate long-term investment in the relationship with our guests.”

Sees higher holiday sales
Target topped analysts’ predictions as sales jumped 13% after shoppers bought Halloween costumes, stocked up on back-to-school supplies and kicked off the search for holiday gifts early.

It also raised its fourth-quarter forecast, predicting comparable sales could rise at between a high-single digit and low double-digit pace in the holiday period. Previously, it estimated a high single-digit increase.

Here’s what Target reported for the fiscal third quarter ended Oct. 30, compared with Refinitiv consensus estimates:

• Earnings per share: $3.03 adjusted vs. $2.83, expected
• Revenue: $25.65 billion vs. $24.78 billion

Net income jumped to $1.49 billion, or $3.04 per share, from $1.01 billion, or $2.01 per share, a year earlier. Excluding items, the retailer earned $3.03 per share, higher than the $2.83 per share expected by analysts surveyed by Refinitiv.

Total revenue rose 13% to $25.65 billion from the same period a year ago, slightly above analysts’ expectations of $24.78 billion.

Comparable sales in the third quarter grew 12.7%, as shoppers made more trips to Target’s stores and visits to its website. That exceeded the 8.2% increase that analysts expected, according to a StreetAccount survey.

Target’s strongest month of the quarter was August, as parents and students bought pencils, notebooks and more to prepare for a return to in-person learning, Chief Financial Officer Michael Fiddelke said on an earnings call. Its comparable sales dipped to about 10% in September and accelerated back into the low-teens in October, he said.

Store comparable sales increased 9.7%, while digital comparable sales grew 29%. (These metrics were up 9.9% and 155%, respectively, in the year-ago quarter.)

Target said sales through its same-day services — which includes curbside pickup service, Drive Up, in-store retrieval of orders called Order Pickup and home delivery service Shipt — grew nearly 60% in the quarter. That’s on top of more than 200% growth in the year-ago period.

As it gears up for holiday shoppers, Chief Operating Officer John Mulligan said the company is making long-term investments to prepare for a spike in demand and adjust to the new ways that consumers shop.

Target uses its stores to fulfill almost all of its online orders, including ones retrieved in the parking lot and delivered to customers’ homes. More than 95% of third-quarter sales were fulfilled in its stores.

Mulligan said on an earnings call that the retailer is adding storage capacity at more than 200 high-volume stores, adding temporary storage areas to support seasonal peaks and doubling the number of parking spots for curbside pickup compared with last year. It is also designating parking spots with numbers to help its employees more quickly get online orders to customers’ cars.

‘Key seasonal moments’
Cornell said sales have been strong throughout the year, but have been “punctuated during key seasonal moments.” He said he expects that pattern to play out again during the holidays, as consumers buy toys, decorations and food.

Target is ready for the holidays, Cornell said. He explained that the retailer has gotten creative to make sure items arrive at stores and warehouses in time, despite clogged ports. It has contracted some of its own ships, unloaded about 60% of its containers at off-peak times and sent more of its goods to less-trafficked ports in Georgia, Virginia or the Pacific Northwest.

That’s led to a nearly 20% or $2 billion increase in inventory year over year, he said.

Hennington said Target has new attractions that will draw shoppers. It has opened additional Disney and Apple shops inside of its stores. Plus, she said, it now is playing up beauty — a popular holiday category — with about 100 Ulta Beauty at Target shops inside of its stores and on its website. It will also launch a limited-time collection with Lego in early December with brightly colored hoodies, home goods and more.

Target began its first holiday deals in early October and has pledged price matches for early birds. He said the company is bulking up operations by hiring 100,000 seasonal employees, filling 30,000 new supply chain roles and giving about 5 million extra hours to current staff.

“The holiday season is off to a great start, but we’ve got many weeks in front of us and think we’re going to continue to see that strength throughout the holiday season right up to Christmas Eve,” Cornell said.

As of Tuesday’s close, Target’s shares are up about 51% this year. Shares closed at $266.39 on Tuesday, bringing the retailer’s market value to $130.01 billion."

MY COMMENT

This appears to be strong earnings but obviously the markets did not like what they heard. I suspect that the markets are interpreting the comments as DOWNPLAYING the pressure on margins which could create significant issues going forward.