Target’s Big Surge, Broader Market Ends 8-Day Win Streak, Fed for Thought 8/21/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:06)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Stocks do try to reclaim their momentum after breaking that eight-day win streak. Retail is a big story today. Target, Macy's, TJX, Fed Minutes, and some benchmark revisions to payrolls at 10 AM. Our roadmap begins with Target's quarterly beat and the profit outlook, sending the stock up double digits today.

David Faber (0:27)

Plus, we've got the broader market looking to regain momentum this after snapping an eight-day win streak. And interest rate policy also on Wall Street's radar, as it always is. Minutes from last month's Fed meeting are due out this afternoon. That's ahead of Chair Powell's Jackson Hole speech. That'll be this Friday.

Carl Quintanilla (0:44)

Let's begin with Target, though, surging on this top and bottom line beat, raising guidance for the full year. Comps up for the first time since the holiday quarter of 22 This is what Cornell had to say about the results earlier on Squawk.

Brian Cornell (0:58)

Now, we said Q2 at the time would get back to growth and that would be driven by traffic. Traffic up 3% was a really important marker for us. But overall, comps plus 2%, stores were positive. We saw acceleration in digital. Digital growth led by drive up and our target circle 360 delivery to home. Those are up over 14%. And from an overall performance standpoint, for up income rate to get back to 6%, people have been waiting for that for a while.

David Faber (1:28)

6.4% actually.

Brian Cornell (1:29)

And to see EPS up over 40%. You know, I feel really good about the progress we're making in the quarter.

Carl Quintanilla (1:36)

Traffic up 3%, Jim, even with basket down a little bit.

Jim Cramer (1:39)

Look, I think this was an amazing quarter. Why? Because the last five haven't been that good. And this was something that Brian Cornell, the CEO, promised.

I know, he promised me, I go over things with him. And we were just marveling about the traffic, how good the Com Store sales are. And David, one of the things that has been the hallmark of this period, it's not that the consumer is discerning. That's not enough. It's that if you cut prices, Costco, Walmart, Target, they come.

David Faber (2:11)

They do, because as we know, Com Store sales, traffic was up 3%, again, to do the math, but it was clearly lower prices that ultimately brought the bottom line.

Jim Cramer (2:24)

And they have such an advantage. It's self-crafted. They have their house brands, and they have big gross margins in house brands, and the house brands sell better than a lot of the premium brands.

David Faber (2:35)

Right.

Jim Cramer (2:36)

That's one of the reasons why I love going to Target is that, I mean, Carl, Target is kind of very much about merchandise. The other guys are about other companies' merchandise. Target is about their merchandise and the bargains they get.

When you go over most of these companies, they say, oh, we have good PVH, and it looks like North Face is selling. No, it's all the brands, the Cat and Jack. It's all their brands, and their brands are indiscernible for most Americans from the actual name brand. And this is not only Costco Kirkland Signature. So we have to start thinking it's not the strapped consumers. Get out of that. Who needs, who knows how to merchandise? Who knows how to cut price? Ryan Cornell demonstrated that he had everything, and that's why that stock is up so much.

Carl Quintanilla (3:23)

Still on a two-year stack, three-year stack, comps are still decelerating. That's not like Walmart.

Jim Cramer (3:30)

No, but I think that you had to see some sign that they're digital, and he's talking about pick up, and their Target Club is good. Look, I like it because they started buying back stock. I told Brian, if you don't start buying back stock, I don't see the conviction. The conviction is there. I think that this is a remarkable quarter, but here's a little quiz I'm going to give David, because he's been a little AWOL. David?

David Faber (3:53)

Yes, sir?

Jim Cramer (3:54)

Give me a retailer that's twice the size of Target.

David Faber (3:59)

In market cap? That would be TJX.

Jim Cramer (4:02)

He's sharper than ever.

David Faber (4:04)

I'm on top of it, man.

We always like to point it out. 128 billion versus roughly 66, almost exactly twice the size of Target. Even though we'll spend a lot of time on Target and probably an equal amount of time on Macy's is TJX.