Target Stock

On August 18th Target will release its second quarter 2009 earnings report.  This report will be followed by a conference call with analysts later in the morning.  Target stock had an amazing July, rallying with the stock market ending the month up nearly 13 percent giving it a YTD return of over 26 percent.  This puts the stock at its highest levels since early October 2008 right before it went into a free fall with the rest of the stock market.  The company is still pushing expansion and hopes to open over 20 new stores in the upcoming year.  That’s a significant amount in a an economy mired in unemployment and recession, but management remains confident in its growth plans.

Target shareholders voted overwhelmingly to keep the four incumbent board members Mary N. Dillon, Richard M. Kovacevich, George W. Tamke, and Solomon D. Trujillo.  The entire slate of Pershing Square directors received less than 20 percent of the vote, except for James L. Donald who received 22 percent.  William A. Ackman earned 19 percent.  In so doing, the shareholders at the annual meeting also voted to reject a plan to increase the size of the board of directors for Target Corporation.

After settling with Sears / K-Mart, the California Attorney General’s office has his sites set on Target stock.  K-Mart recently settled a case with California for $8.7 million over the dumping of illegal substances in local landfills.  Apparently, Target Corporation is guilty of similar transgressions.  It is unclear if Target will be offered a settlement, or even want to settle, as K-Mart did.

Year-to-date the Target vs. Wal-Mart stock battle has gone to Target.  In fact, it’s not even close.  Wal-Mart is down over 12 percent.  Target stock, on the other hand, is up nearly 18 percent.  Target also has a leg up on Costco (also down 2009) and DollarTree which is up over 2 percent on the year,

Believe it or now, Target stock ended the week before Memorial Day in the green.  Sure it wasn’t up more than a point and, sure, it dropped nearly 10 percent from its intraday high on Wednesday, but the week was still up.  No one was too excited about its earning beat after the numbers came across.  A thirteen percent profit drop is a tough one to swallow, even these days.

Time for our Target stock checker.  It seems as if the fears of a consumer melt down are creeping back in.  Target stock ended last week down nearly 7 percent.  Also came news on Friday that Pershing Square had reduced its Target stock holdings.  With consumer credit likely to be the next big story, it is likely that the consumer will not rebound in 2009 and we should be looking toward 2010 for a potential rebound.

Target has announced its first quarter 2009 earnings report date.  The company will hold its call for investors on Wednesday May 20, 2009 at 10:30 AM.  The company’s announcement will come earlier that morning.  The stock is under pressure with growing concerns about the consumer’s viability.  Most still see the store as a more expensive Target, but will the liquidity pump from the Fed push any customers into Target stores?

Or at least the location likely would not have been guessed.  William Ackman and Pershing Capital Management will be forced to end their proxy battle with Target to replace members of the board of directors on a nearly complete construction site in Wisconsin.  The new Target store in Waukesha will be the meeting site for the Target investors, including Ackman and his company’s nearly 8 percent stake in the company.  Some feel the future of Target stock is at stake…

Year to date Target stock has returned a nice 16.07% plus a 16 cent dividend.  Not too bad for one of the biggest financial disasters since the Great Depression.  Of course this return is of little solace to those who purchased the stock near $60.  Or perhaps little to those who have only seen a 14.72% return (plus dividends) over 10 years on Target stock.

One analyst is saying the Target stock is on track for same story sales that are flat for April.  While this seems like really good news, the store is also being helped by the shift of Easter back into April.  As clearance and old stock gets purged from the system, gross margins are improving.  General consumer confidence also seems to be picking up as well.  Perhaps Target stock is on its way for a turn around.