When you think about the US economy you have to remember 66% is related to consumer spending. How is the consumer doing and what the large retailers are doing in relationship to ensuring the consumer spends at their stores?

In an article by Siddharth Cavale and Juveria Tabassum of Reuters, the second largest retailer after Walmart is Target. CFO Jim Lee said the company was moving away from giving quarterly forecast figures for sales and profit because it expected more volatility in its business.

Consumer spending trends are yet back to normal today.

Sticky inflation and tariffs on imports is expected to temper demand for non-essential categories such as home furnishings and electronics that make up more than 2/3’s of Target’s sales.

Prices were expected to increase for groceries because the supply lines are short for seasonal produce and much of the produce comes from Mexico. A 25% tariff across the board means higher prices.

Target said it would invest about $5 billion in stores and technology this year.

Beauty, apparel, toys and sporting goods were the top performers during the holiday quarter while home decor and finishing sales were negative.

Target was aggressive with its marketing and merchandising strategies as consumers spent selectively on popular projects during the holidays. One bright spot was the Target partnered exclusively with pop star Taylor Swift and sales increased.

For the holiday sales, sales were up 1.5% but were offset by heavy discounts and promotions. Earnings fell to $2.41 a share, but it still beat estimates of $2.27.

Linking to dividend paying stocks, for large companies they have access to a great many options and abilities to maintain and drive market share. Most of the time they do not use all the options, but they are there. One of the reasons you want to buy larger profitable stocks is they have options to use.

There are more questions than answers, till the next time – to raising questions.