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Target’s turn tomorrow


Second-quarter results from retailers are coming fast and furious this week, and on Wednesday Target will offer its perspective on the state of the consumer and its outlook for spending during the second half of the year. If reports from other retailers are any indication, a blend of expense control and tightly-managed inventories will offset muted sales growth and enable Target to meet or exceed analysts’ earnings estimates. Strength in apparel is believed to help overall profitability, and Target is expected to have performed at least as well as several of its competitors who reported last week.

Macy’s reported second-quarter results early last week that exceeded analysts’ estimates, and the company raised guidance after a 4.9% same-store sales increase. Kohl’s report a 4.6% comp increase, and Nordstrom’s comps surged 8.4%. JCPenney reported the weakest results of the group with a paltry 0.9% same-store sales increase, but still managed an improved profit performance as earnings per share of 6 cents exceeded the prior year’s break-even performance.

In Target’s case, a strong profit performance won’t change the fact that underlying economic conditions are not conducive to high levels of consumer spending. Therefore, Target executives, as those at other retailers before them this week and last, will have little choice but to express concern about the highly uncertain outlook for consumer spending regardless of how good they feel about the company’s strategic positioning and ability to gain share amid a challenging economic climate.

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