Goal cuts grocery costs in rival gross sales occasion

Customers shop in the grocery section of a Target Corp. store in Chicago, Illinois, USA on Saturday, November 16, 2019.

Daniel Acker | Bloomberg | Getty Images

Electronics, toys and groceries?

How aim starts a competing sales event to compete with him Amazon Prime Day, the big box retailer, puts its grocery department in the spotlight. It adds discounts and promotions to entice customers to its cereal, meat, and soda aisles.

Target introduced Deal Days to compete with Prime Day in 2019, but this will be the first time Target has used the event to promote groceries. The discounts extend from Sunday to Tuesday – one day longer than the event of the e-commerce giant.

It’s likely that Target sees the food category differently these days. Food was a major reason Target’s sales skyrocketed and its market share grew during the pandemic. While people settled down at home, dinner ingredients, staples, and snacks drove into the store. Target had a head start in the early months of the health crisis by keeping its doors open as a major retailer by locking it down. As rival stores reopened, Target was still drawing shoppers in with its variety of merchandise, from eggs to workout tops, while people rounded up their trips and filled larger baskets.

Even with people making social plans and eating out again, Target sees its grocery stores as a way to get people to come back. The next few months will test whether Target and other grocers can convince people to keep filling fridges and cooking, even if they plan to hang out with friends for a drink or go out with family for dinner.

Before the pandemic, US consumers spent more each month in restaurants and bars than in grocery stores. This pattern was reversed in March 2020. In the past two months, the habit of spending more on restaurants has returned, according to the US Census Bureau. That leaves grocers competing for a bigger slice of a shrinking cake.

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Amazon Prime Day is all about spending that can keep up with the busiest days of the Christmas shopping season. According to an analysis by Adobe Analytics, based on a survey of 1,000+ consumers, US online spending is expected to beat last year’s all-time record of $ 10.4 billion during the two-day sales event and cyber Monday of last year surpassed US retail site visitors. According to a survey by Adobe, nearly 60% of consumers said they would shop online during Prime Day.

Retailers of all sizes have taken up the shopping vacation and increased sales as shoppers browse and buy more than usual.

Deal Days discounts will be widespread at Target, but there will be a special grocery promotion: $ 10 worth of gift cards will be given out to customers who spend $ 50 or more on food and drink while they are using one of its Use same day services as roadside pickup and home delivery service, Shipt. The company declined to share certain items that are available for sale.

At least two of Target’s competitors will also dangle grocery stores: Walmart and Amazon. Walmart is also adding groceries to Deals for Days, its annual sale, for the first time, according to a company spokesperson. It will lower the prices of foods like ribs, watermelon, ice cream, and coffee.

Amazon plans to sell some groceries for $ 1 and its Cursive wine brand is on sale. Whole Foods will discount seasonal products like lemonade and Caprese pizza, a company spokesman said.

If buyers benefit, these offers could help companies hold their own against tough year-on-year comparisons. All three have big growth numbers that will be hard to match or beat – especially in the grocery department, where consumers were stocking items during the pandemic.

Target sales in the last fiscal year grew by more than $ 15 billion – more than the combined sales growth of the last 11 years. The company said it gained approximately $ 9 billion of market share during the year, according to the company’s own and external research.

The company’s shares are up nearly 31% so far this year, reaching a market value of nearly $ 114.05 billion.

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Comparable sales for Target, which tracks sales in stores that are open for at least 13 months and online, rose 19.3% over the past fiscal year – a faster rate than any other major food company. KrogerLike-for-like sales for Walmart increased 14.1% and Walmart increased 8.6%. Retailers’ fiscal years and definitions of comparable sales vary slightly.

By combining food and digital services, Target has also found that it can drive customer loyalty.

At a conference call on the fourth quarter results on March 2nd, Target CFO Michael Fiddelke said customers tended to visit their stores more frequently, increase their food and beverage spend by an average of 20-30%, and get more sales in other categories after getting fresh or frozen Groceries bought by pickup or roadside store had to pick up the first time.

A sign advertising Shipt, the same day grocery delivery service owned by Target, will be displayed on a freezer display in a Target Corp store on Saturday, November 16, 2019. exhibited in Chicago, Illinois, USA.

Daniel Acker | Bloomberg | Getty Images

The company also announced that groceries and beverages accounted for 20% of its total sales for the year, making the category the second largest sales driver after beauty and household items at 26%. The company started during the pandemic a private label of snacks and desserts and a collection of gourmets Pasta, coffee and more.

So far, Target has been able to keep growth going. In the first quarter, Food and beverages grew in the low to mid single digits despite hard comparisons with the same period last year when consumers stocked up on supplies and sought shelter.

Target will use food as a differentiator and “defense mechanism” on Amazon Prime Day, Krishnakumar Davey, president of strategic analysis at research firm IRI. Over the past year, it has helped Target promote bigger shopping carts and attract new customers, he explained.

Target has deepened its market penetration with lower-income customers and older buyers, according to market research from IRI.

It has also done more business than the competition in the past few months. As of the beginning of June, the number of destination trips increased by 16.1% compared to the same period in the previous year. All other colleagues except Cost co, are in the low single digits, according to the IRI, which collects consumer data from a representative sample of over 100,000 households.

Compared to Amazon, Target also has a much larger footprint in the food space. Amazon owns more than 500 Whole Foods stores and has about a dozen Amazon Fresh stores, its expanding grocery chain. Target has around 1,900 stores.

Eating out may return, but home food consumption is still above pre-pandemic levels due to other factors such as remote working, Davey said. Also, he said, a sale of groceries might be more popular than other types of offerings.

“Everyone needs something – more than an iPad or whatever,” he said. “It’s a high frequency object.”

Reporting on Amazon Prime Day 2021

Read more about Amazon and others scheduled for this year’s sales events:

Unhedged: Inventory costs and the rate of cash

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It’s the end of Unhedged’s first week. How are you? Email me: Robert.Armstrong@ft.com.

QE and Stock Quotes (Part Two)

Here are two lines that mostly go up and to the right:

The two lines are the M2 money supply (cash, deposits, money market accounts) and the S&P 500. M2 increases rapidly due to the quantitative easing: the Fed buys securities for cash and thus provides new money. Why the S&P is rising fast is less clear. The fact that the two lines have merged lately suggests a popular causal story: “The Fed prints money and it has to go somewhere and it goes public.” A few days ago I did written down that these causal stories are wrong because cash is not converted into stocks. When I buy stocks, the seller gets the money. It’s not “on the stock market”.

What really happens is that all of the extra money sloshing around is making people want it less compared to stocks, and the increased relative demand for stocks is forcing stock prices up. This is how QE affects stock prices (or in some way; other people, central bankers especially, prefer stories of QE lowering the discount rate, which will come soon.)

Eric Barthalon, global head of capital markets research at Allianz Research, notes that this process is self-limiting. As stock prices rise, the weight of cash relative to stocks in investors’ portfolios decreases to a level at which investors are satisfied. So often investors stop trading and prices stabilize. In this story, it is not the Fed that is simply stuffing the markets with cash. There is an intermediate factor: the relative preference of investors for cash.

Barthalon’s argument – I find it quite persuasive – is that (a) investors’ preference for cash is not stable and (b) the Fed has no control over it at the crucial moments when markets are falling. You can track investors’ unstable preference for cash by looking at the speed of money or the change of money. Barthalon told me:

“It is not the supply of money, but its circulation that causes asset prices to rise or fall. . . Historical experience shows that the central banks do not control the speed of money, especially in the capital markets. “

Now we see why central bankers might prefer the idea that they are using QE to control the discount rate that determines the value of stocks by keeping government bond yields low. Because in theory, this lever works even if investors suddenly decide they like cash very much – which they do when the markets fall.

Here is Barthalon’s long-term graph of the speed of money in the exchange (the value of daily market transactions divided by M2) versus the value of the exchange. Check out how much the speed slows down when the market declines:

These two lines vary with each other and are linked by a neat causal story. The takeaway is that the sheer volume of money floating around cannot keep the stock market high.

Armstrong’s division is wrong: Bitcoin

Yesterday I argued that Bitcoin can best be viewed as equity in a company whose only advantage is unproven technology. This technology will be proven when Bitcoin becomes money. But Bitcoin is not money now, because while people are trading it, it is not widely accepted as a form of payment, there are few transactions, the transaction costs are high, and so on.

The most common response I received was that Bitcoin is not trying to be money. Money has two key properties. It is a store of value and a medium of exchange. Most people who think I’m wrong think Bitcoin is all about storing value. That is why its limited supply is so important. If it’s a little expensive to trade, a little illiquid and so on – who cares? It is like gold and diamonds, goods whose standout feature is their rarity and how highly valued they are, not their ease of use.

I’m not sure. Gold and diamonds are used in industry and jewelry. They have millennia of conventions supporting their preciousness. The only thing that Bitcoin supports as a store of value, as a precious commodity, is that it can be both a store of value and a particularly good medium of exchange – one that can carry out far, smoothly, at low cost and (here) transactions is the actual one Key) without supervision by third parties or government control. And I don’t think we know yet that this is the case. Bitcoin is rare, but so are the watercolors I painted in high school. That doesn’t make them a store of value.

Bitcoin heads should also register for #fintechFT, our newsletter about the interface between technology and finance. click Here.

Good read

I was impressed with these Bloomberg story of how strong the demand for homes is in the US, with home builders moving away from fixed prices and running blind auctions to get the highest bids possible:

“A collision of forces caused by a pandemic [is] Only hold back new inventory when it is needed most. Buyers stamp for new homes as remote working boosts employment, while rising timber costs and labor shortages slow construction. “

This description suggests that the mixture does not contain any 2007 style toxic speculation. That makes me paranoid. Isn’t speculation everywhere these days? Why not live I don’t know if there is any evidence of this, but I’ll search. If you have any, email me.

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Inventory picks to climate excessive gasoline pump costs

Gas prices rose over $ 3 per gallonThis was the highest level since the end of 2014, when the shutdown of the Colonial Pipeline depressed supplies.

The price hike precedes what is expected to be a busy summer cruising season, with reopenings and pent-up demand fueling consumer travel.

However, Mark Tepper, president of Strategic Wealth Partners, doesn’t expect this to fail summer road trips.

“If you think about it, a family of four has received over $ 10,000 from the government over the past year. On July 1, they are paid $ 300 per month per child, so you know an additional $ 100 per child for a month or so that they pay at the pump is really nothing in the grand scheme of things, considering what’s going on right now, “Tepper told CNBC.”Trading nation” On Wednesday.

Tepper added that rising airline prices could also force consumers to take road trips via flying to vacation destinations.

“The company I like here is Six flags. I like it when the regional amusement park plays over the target parks Disney and Water world. I think they’re easier to get to, you can go there, you can go on a day trip, you can go for a weekend, “said Tepper.

Shares in Six Flags, a park operator valued at $ 3.5 billion, are up 21% in 2021, more than double the earnings for the broader market. Tepper said the stock has room to grow.

“Six Flags is trading at a discount, and I really think expectations and earnings revisions for these people will keep rising over the next few quarters, so I think it’s a buy here,” he said.

According to FactSet, the company is projected to post a loss of 82 cents per share in fiscal 2021, which is less than the pandemic loss of nearly $ 5 per share in 2020. In 2022, earnings are projected to be $ 1.92 per share.

Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, likes Six Flags in the short term but says that another game at the amusement park is a better choice in the long term.

“Disney has a few other legs to offer besides the park game as they also have Disney Plus and many other elements in their business,” Sanchez said in the same interview. “We think it’s still attractive because the prospects for these destination parks are still pretty bleak. … Disney was the hottest park in the world before Covid. I think it will still be the hottest park after Covid.”

Disney will report the win after the bell on Thursday. Analysts expect a profit of 26 cents per share compared to 60 cents per share in the previous year. The parks and experiences segment accounts for 23% of total sales.

Disclosure: Lido holds Disney.

Disclaimer of Liability

Don’t Waste Your Cash: Hovering paper and lumber costs

What do toilet paper and lumber to build a house have in common? Wood. And the prices of everything that uses wood are rising sharply.

Do you think toilet paper is a bit expensive now – even since it was short last year? It goes up again.

Kimberly Clark just announced that Cottonelle and Scott toilet paper prices will go up sometime in June.

Don’t Waste Your Money: COVID-19 Vaccine Survey Scam

The reason? Wood pulp prices that have increased 20% over the past year due to shortages and increasing demand.

And in a bizarre way it’s linked to the price of sawn timber. It also depends on the price of the raw wood.

The National Association of Home Builders says this will add $ 24,000 to the cost of a new home.

The “Doesn’t Stink” file shows how building a home or a major home improvement project will cost homeowners much more in 2021.

Don’t waste your money: unemployment tax refund

Builders say it’s nearly impossible to build a home for less than $ 150,000 in material. When will it end? The Builders Group hopes that lumber prices will drop in the fall of 2021 when supply rebalances.

But the price of that toilet paper wipe is unlikely to go down – and that stinks.

As with all pandemic-induced price increases, the price is rising rapidly, but it will be months, if not longer, before it falls again.

Lions Gate Leisure (NYSE:LGF.A) Share Costs Have Dropped 63% In The Final Three Years

It is undoubtedly positive to see that Lions Gate Entertainment Corp. (NYSE: LGF.A) The share price has increased by 71% in the last three months. That doesn’t change the fact that returns over the past three years have been disappointing. In fact, the share price has fallen a tragic 63% over the past three years. So it’s good to see it climb up again. While many would stay nervous, there could be more profits if the company can put its best foot forward.

Check out our latest analysis for Lions Gate Entertainment

With Lions Gate Entertainment showing a loss over the past twelve months, we believe the market is more focused on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong sales growth. Some companies are willing to shift profitability in order to grow sales faster. In this case, however, good sales growth is expected.

For the past three years, Lions Gate Entertainment’s revenue has decreased 4.4% per year. That’s not a good result. The price drop of 18% over three years is understandable as the company has no profits to show and sales are going in the wrong direction. Of course, the future will decide whether today’s price is good. We generally don’t own companies that are losing money and cannot generate income. But every company is worth a look when it makes its first profit.

The graph below shows how revenues and earnings have changed over time (indicate the exact values ​​by clicking on the image).

NYSE: LGF.A earnings and revenue growth Jan 19, 2021

Lions Gate Entertainment is a well-known stock with numerous analyst reports pointing to an insight into future growth. If your are thinking of buying or selling Lions Gate Entertainment stock this is a good place to check free Report showing analyst consensus estimates for future earnings.

Another perspective

Last year, Lions Gate Entertainment shareholders received a TSR of 19%. It’s always nice to make money, but that return falls short of the market return, which was around 22% over the year. On the upside, this is certainly better than the annual loss of around 18% over the past three years, which means the company has been doing better lately. We hope that the trend reversal will continue. I find it very interesting to view the share price as a proxy for business development over the long term. But to really gain insight, we need to consider other information as well. Please note this anyway Lions Gate Entertainment is shown 2 warning signs in our investment analysis , and 1 of them is a bit uncomfortable …

If you want to buy stocks in addition to management, you might love this free List of companies. (Note: Insiders bought them).

Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on US exchanges.

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