What's going on?

Major retailer Target hit the spot on Tuesday: both it and rival Kohl�s saw their shares rise over 5% after reporting better-than-expected earnings. Across the Atlantic, however, an update from British department store chain Debenhams caused its stock to fall 3% (tweet this).

What does this mean?

Store-based retailers around the world are all facing the same quandary: how to simultaneously please both their customers and their shareholders. One should take care of the other, since happy customers� increased spending translates to growing sales and profits � but the high (and rising) cost of satisfying customers� demands is irksome.


Big spending on digital upgrades like ecommerce, app shopping, and in-store collection helped push Target�s revenue beyond forecasts last quarter � but the amount of profit it made from those sales declined. The same was true of department store chain Kohl�s. Sales at Debenhams, by contrast fell 5% over the last six months.

Why should I care?

For markets: Some US retailers are back on target.

Target�s and Kohl�s higher-than-expected earnings growth guidance for 2019 probably contributed to investors sending their shares higher on Tuesday. Analysts forecast sales across existing US retail stores to grow by 2.8% this year � but slightly below 1% when stripping out the effect of rising prices (a.k.a. inflation), according to FactSet. Investors already expected Target to hit that mark in 2019, although they were less sure about Kohl�s. So they were pleasantly surprised by the company�s own improved sales forecast on Tuesday � which, coupled with cost cutting, should lead to higher profit than previously thought.

Zooming out: Que ser�, ser� for Debenhams.

Debenhams� long flirtation with oblivion continues � and it could still go the same way as Sears. Just two months after saying it was on track to meet investors� annual profit predictions, Debenhams admitted that advice was �no longer valid�. Despite sales growth improving slightly, convoluted discussions with lenders to save and restructure the company may distract its management from the tricky business of actually selling more stuff.