Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Wal-Mart Stores, Inc. (WMT), Macy’s, Inc. (M), Target Corporation (TGT): Will These Stocks Perform in the Long Run?

The retail business seems to be having its fair share of problems. Numbers coming in for the last quarter have been disappointing, to say the least. What then should investors do–cash out or stay? Let’s find out.

Wal-Mart Stores, Inc. (NYSE:WMT)

Losing its shine?

The first among the major retailers to report numbers this season was Macy’s, Inc. (NYSE:M).

After reporting some superb numbers in the previous quarter, the company failed to impress investors this time around. Net sales totaled $6.1 billion, down 0.8% from $6.1 billion in the previous year. Net profit amounted to $281 million, compared to $279 million in the prior year. At $0.72 per share, diluted earnings were up 7.5% from the prior year. Weak consumer spending was stated as the main cause behind Macy’s, Inc. (NYSE:M) poor performance. According to top executives at the company, consumers are spending more on big purchases like cars and homes at the moment. As a result, demand for retail items such as apparel, footwear and electronics are on hold. In the next two quarters, the company expects comparable sales to grow by 2.5%-4%.

A wee bit better

Wal-Mart Stores, Inc. (NYSE:WMT), which also released its last quarter numbers this month, only did slightly better. Wal-Mart Stores, Inc. (NYSE:WMT)’s net sales totaled $116.2 billion, up 2.4% from the prior year. Net income saw a modest growth of 1.3% from the same quarter the previous year. Diluted earnings amounted to $1.24 per share, as opposed to $1.18 last year. Wal-Mart Stores, Inc. (NYSE:WMT)’s main cause of concern has been the payroll tax hike. The company has also tapered its expectations for the year ahead.

Canadian woes

Target Corporation (NYSE:TGT), the latest among retail brands to report low numbers, has another factor to blame. The retailer’s expansion plans in Canada have proved to be more drawn out than anticipated, putting a pressure on the company’s profits. At $611 million, net earnings for its last quarter were down 13.2% from the previous year. Total revenue amounted to $17.1 billion, producing 2% year-over-year growth. The 2% hike in payroll tax has also been a concern for Target Corporation (NYSE:TGT), which has cut down its outlook for the rest of the year.

Plans and such

With customer spending occurring in waves and the economic recovery still on hold, the best bet for the retailers would be to focus on driving sales by making their products and offers more attractive.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.