STORY: U.S. stocks closed down Wednesday with the target of investor angst being… well, Target, after the retailer became the latest to warn of a pullback in consumer holiday spending.
The Dow closed down marginally while the S&P lost more than eight-tenths of a percent, and the Nasdaq shed more than one-and-a-half percent.
Retail stocks slumped broadly along with Target, which also saw its third-quarter profit cut in half.
Loreen Gilbert is CEO of WealthWise Financial Services.
“I think the difference in Target, in what we saw, is that they didn’t have as much success in cost containment as those input costs have increased, and therefore profit margins becoming slimmer. Whereas you can contrast that to Walmart, which has done a better job as far as cost containment. [FLASH] Cost containment on increased prices from their vendors, and being able to hold down the line with their vendors so that they can maintain their profit margins.”
Despite Target’s sales warning, data showed that U.S. retail sales increased more than expected in October.
That may be hopeful news for Estee Lauder, which agreed to buy U.S. fashion label Tom Ford for $2.8 billion, its biggest deal yet. The deal gives Estee Lauder apparel as a new revenue stream and makes Ford – who intends to stay on through the end of 2023 - a billionaire.
Elsewhere in retail, shares of Lowe's rose 3% after the home improvement company raised its annual profit forecast, saying higher mortgage rates were keeping consumers from buying new homes and renovating their existing properties instead.