Over the last year Costco (COST) is up in price 5.29%, WalMart (WMT) is up 6.17%, but Target (TGT), even with its fall in early trade May 3, is up 15.61%.
Why?
Its margins aren't growing, and sales are up less than 10% from 2009. Sales gains over Easter trailed analysts' estimates. Same store sales are up 5.6% year-over-year.
The reason has to be that the street thinks CEO Gregg Steinhafel, who earned $19.5 million last year, is trying stuff rivals like JC Penney (JCP) (down about 10% over the last year) are just talking about doing:
Boutique "stores within the store," something Penney has been talking about, but which Target is doing with Cos Bar.
Smaller stores, something WalMart has been talking up but which Target is doing in LA.
Big name brands, dropping the Amazon Kindle for (who knows) maybe Apple products? Or Microsoft's?
All mainline retailers are suffering from "showrooming," customers comparing prices with online merchants while in offline stores, and walking out if prices don't match.
But Target seems to be doing a better job of fighting that trend, on every level, than its rivals. And because the company is much smaller, by revenue, than WalMart or Costco, this willingness to try stuff can help its bottom line quickly.
What investors should know, however, is that all this optimism is speculative. Performance does not explain Target's rise. It's a triumph of hope for change. So far.
