Out of these four retailers: Target, Walmart, TJ Maxx, and Home Depot, can you guess which one had the best Q2 performance? The answer might surprise you.
Good Friday Morning. Notable retailers like Target and Walmart have unveiled their Q2 results, offering a glimpse into the current state of the retail industry. In the transportation sector, Jim Cramer's mention of XPO Logistics as the "new king" of trucking might have XPO Executives worried, while the joint venture of CPKC, CSX, and G&W signals potential shifts in cross-border trade. On a cautionary note, Maybach & GLT Logistics, both significant players in the transportation sector, have reported identity thefts this week, underscoring that even industry giants are not immune to sophisticated fraud schemes.
Out of these four retailers: Target, Walmart, TJ Maxx, and Home Depot, can you guess which one had the best Q2 performance? The answer might surprise you.
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In today's email:
Three Freight Headlines: Jim Cramer touts XPO Logistics as trucking's 'new king'; CPKC, CSX, & G&W plan US-Mexico rail corridor; shipping faces soaring costs and blanked sailings.
Retail Earnings Saga: Target, Home Depot, TJX, & Walmart
Around the Freight Web: Werner CEO surprised by small carriers resilience; Maybach & GLT Logistics warn of scammers using their credentials; Chicago partners ship aid to wildfire-hit Maui, and more.
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🐔 WHAT’S COOKIN’ IN FREIGHT
🚚 Jim Cramer DubsXPO Logistics The New King of Trucking. Jim Cramer, the often unpredictable stock market commentator, has named XPO Logistics the 'new king' of trucking, just as Morgan Stanley raises its price target for the company to $65. Despite this royal proclamation, XPO's stock has been trading slightly down, at around $72.80. Cramer, known for his bold and sometimes erratic predictions, has also recently spoken of a potential "golden age" for natural gas. Is XPO stock about to tank? We shall see...
🚢 Shipping’s Rising Costs & Blanked Sailings. Blanked sailings in Asia-Europe trade routes remain frequent, with 10.8% of major alliances' Central China-Europe loops voided in recent months. Meanwhile, U.S. importers face soaring costs, as the average spot rate for a 40-foot container from China to the U.S. West Coast surged 61% to $2,075. Despite a record addition of 1.2 million containers of capacity in 2023, carriers are pushing for peak-season surcharges in long-term contracts, while some experts anticipate a potential drop in spot rates due to the excess capacity.
🛤️ US-Mexico Rail: CPKC, CSX & G&W Unite. CPKC, CSX, and G&W are partnering to establish a transformative freight corridor connecting Mexico, Texas, and the U.S. Southeast. They're developing a new direct interchange in Alabama, a move that CSX CFO Sean Pelkey highlights as a game-changer in cross-border trade. As this project awaits approval from the Surface Transportation Board, Norfolk Southern is also strategically positioning itself with CPKC to enhance service and regain market share from trucking. Despite leadership changes at CSX, the team remains optimistic about breaking organizational silos and seizing this new opportunity.
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Retail Earnings Report: Target, Home Depot, TJX, & Walmart
In a turbulent retail environment, Target, Home Depot, TJX, & Walmart recently reported their Q2 earnings, revealing a blend of disappointments and triumphs. Here's a snapshot of each retailer’s performance and expert insights.
Target
Revenue in Q2: $24.77 billion, a year-over-year decrease of 4.9%.
Inventory Wins: According to Supply Chain Professor Jason Miller, Target scored a significant win with its Q2 2023 inventories down 17.2% from Q2 2022. Miller emphasizes Target’s strategic right-sizing of inventories and highlights its improved gross margin rate, which rose to 28.2% in Q2 2023 from 22.6% in Q2 2022. Craig Fuller, CEO of FreightWaves, also observed a significant slowing of truck visits to Target distribution centers compared to Walmart and Costco, indicating a potential broader shift in consumer behavior. Read Miller's Analysis, Fuller's Perspective.
Graphic Source: Jason Miller/LinkedIn
Home Depot
Q2 Net Income: $4.66 billion, down from $5.2 billion in the prior year.
Sales: $42.92 billion, down from $43.8 billion.
D.A. Davidson analyst Michael Baker wrote that the results were “good enough” and noted quarterly improvements in same-store sales, indicating a recovery in the business. "Overall, while some near-term bulls may have wanted a bigger beat, we think these results are good enough to sustain the recent rally in Home Depot shares," Baker wrote, rating the stock at neutral with a $290 price target. Decker adds that the company remains positive on the medium-to-long-term outlook for home improvement and its ability to grow its share in a fragmented market.
TJX Cos.
Q2 Sales: $12.76 billion, up 7.7% YoY.
Profits: Rose 23%; expects comparable store sales to climb 3% to 4%.
Shares of TJX surged more than 3% on the revised guidance and set a new all-time high. Analysts rate the stock a moderate buy and have been raising their price targets all year. Assuming that analysts continue this trend, the consensus of $90 should move higher over the next few weeks and months, possibly leading the market to another new high.
Expert's Take: Despite broader retail challenges, TJX is winning market share with its off-price strategy.
Earnings per Share: $1.84 adjusted, beating the $1.71 expected.
Net Income: Jumped 53% to $7.89 billion.
U.S. E-commerce Sales: Up 24% YoY.
Expert's Take: CFO John David Rainey emphasized Walmart's strength in convenience and value, despite emerging pressures like resumed student loan payments and tighter credit markets affecting consumer spending.
Walmart lifted its full fiscal-year consolidated net sales forecast to an increase of about 4% to 4.5%.
Graphic Source: Walmart
What’s The Takeaway? As inflation and social values increasingly impact consumer behavior, retailers are navigating a complex landscape. Target is feeling the weight of social backlash and inflation, Home Depot is maintaining despite a slowdown, TJX Cos. is thriving as consumers hunt for deals, and Walmart is leveraging its low-price strategy and e-commerce growth to fuel higher sales.
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AROUND THE FREIGHT WEB
💰 Small Carriers' Surprising Financial Strength. Small and medium-sized carriers accumulated more cash during COVID than anticipated, enabling them to endure challenges longer than expected, according to Derek Leathers of Werner.
🚨 Scammers Target GLT & Maybach. GLT Logistics and Maybach warn of scammers using their credentials to exploit freight services.
💼 Estes Eyes Yellow’s Terminals in $1.3B Bid. Estes, the 4th largest LTL carrier in the nation, bid $1.3B for Yellow's terminals amid Yellow Corp.'s bankruptcy dealings with Citadel and MFN Partners.
🛫 Chicago to Maui Relief Effort. SEKO Logistics and partners send 24,000 pounds of essential supplies from Chicago to wildfire-stricken Maui. Learn how you can help.
⚖ Frances Hall's Legal Battle Continues. Frances Hall, a trucking company owner, and convicted murderer faces an ongoing Texas legal battle. She's now accused of evading $9 million in insurance premiums.
😂 Freightliner vs. Bentley. A hilarious comparison between a Freightliner & a Bentley.
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I’m Adriana, a writer and editor at FreightCaviar. I’ve covered everything from freight tech to industry lawsuits and market shifts, helping scale us to almost 14K subscribers. My goal: to make logistics stories digestible, clear, and fun to read.
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