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Stock Wars: Target Vs. Walmart

Chris Katje
·4 mins read

Target (NYSE: TGT) and Walmart (NYSE: WMT) both opened their first stores in 1962. The two have a lot in common, but also key differentiators that set them apart. 

Today, we take a look at the two retailers compared side by side.

Retail Strength In The US: There are now 4,753 Walmart branded stores in the United States. Walmart’s U.S. segment contributed $341 billion in fiscal 2020, representing 66% of the company’s annual revenue.

A key differentiator between the two retailers is Walmart’s ownership of Sam’s Club. A membership warehouse, Sam’s Club competes with rival Costco (NASDAQ: COST) in the U.S. with 600 stores.

Sam’s Club had revenue of $58.8 billion in fiscal 2020, representing 11% of Walmart’s revenue.

Target has 1,880 stores in the U.S. According to the company, 75% of the population lives within 10 miles of a Target store.

International Relations: One of the big differences between Target and Walmart is in their international businesses.

All Target locations are inside the U.S. In 2013, it tried to expand its business into Canada.

The two-year run saw 133 locations open in Canada, but a $2.1-billion loss for the parent company.

The Walmart international segment has over 5,900 units and serves 100 million customers weekly in 26 countries. In 1991, Walmart opened its first international store in Mexico. Walmart’s international segment had fiscal 2020 revenue of $120.1 billion, representing 23% of the company’s total.

Digital Sales At Walmart, Target: Target’s recent second quarter saw comparable sales growth rise 24.3%, the best-ever gain in company history, thanks to year-over-year digital sales growth of 195%.

The strong digital gains have helped Target gain $5 billion in market share in 2020. Target has gained 10 million new digital customers so far in 2020.

Walmart began its push into digital in 2000, but has made some disappointing acquisitions in the segment since then.

The company paid over $3 billion for Jet.com in 2016. Jet was eventually shut down after some of the products and tech were pushed to Walmart; the company’s founder leads the U.S. e-commerce operations.

Walmart, Target Financials: Target has seen its sales grow over the last five years, but only at an average growth rate of 1.5%. Annual sales were $74.5 billion, $70.3 billion, $72.7 billion, $75.4 billion, and $78.1 billion for the last five full respective fiscal years beginning with 2015.

Target has seen operating income dip throughout the last five years. Target saw its operating income hit $4.7 billion in fiscal 2019 compared to $4.5 billion posted back in fiscal 2015. Earnings per share have grown from $5.25 in fiscal 2015 to $6.34 in fiscal 2019.

Walmart has seen its revenue grow annually over the last five years. Revenue was $482.1 billion, $485.9 billion, $500.3 billion, $514.4 billion, and $524 billion over the last five respective full fiscal years.

Operating income for Walmart has fallen from $24.1 billion in fiscal 2016 to $20.6 billion in fiscal 2020. Earnings per share were $4.57 in fiscal 2016 and came in at $5.19 for fiscal 2020.

Walmart, Target Stock Performance: Target shares are up 18% in 2020. Over the last five years, Target shares have increased 95%. The last 10 years saw Target shares gain 196%. Target has a market capitalization of $76 billion.

Wallmart shares are up 17% in 2020. Over the last five years, Walmart shares have increased 115%. The last 10 years saw Walmart shares gain 177%. Walmart has a market capitalization of $393 billion.

What’s Next For Walmart, Target: Target is pushing the grocery segment to help improve its 3% market share compared to rivals Walmart (21%) and Kroger's (NYSE: KR) 10%.

In 2017, Target acquired Shipt, a same-day delivery company, for $550 million. Food and beverage sales grew 20% for Target in the second quarter and represented 20% of overall sales.

Walmart is pushing into a new membership program called Walmart+, which could help the company compete with Amazon.com (NASDAQ: AMZN). The membership will offer customers free grocery delivery, discounts on fuel and a self-scanning app to use in store to skip checkout lanes. Walmart is also one of several finalists trying to buy the U.S. operations of social media company TikTok.

Photo courtesy of Walmart. 

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