A humorous look at the companies that caught our eye, for better or worse, this week
Estée Lauder (DOG)
Things you don’t need when you’re working from home: 1) pants; 2) combed hair; 3) makeup. Shares of Estée Lauder tumbled after the cosmetics giant said sales tumbled 32 per cent in the quarter ended June 30, as closed stores, pandemic-related travel restrictions and the work-from-home trend hurt demand for foundation, eyeshadow, lipstick and other substances human beings ritualistically smear on their faces. With Estée Lauder also cutting up to 2,000 jobs, there is makeup running everywhere.
So bricks and mortar stores are dying, are they? Not if Target has anything to say about it. The discount retailer posted a 24.8-per-cent surge in sales for the second quarter ended Aug. 1, as customers concerned about the coronavirus pandemic ordered more merchandise online for in-store pickup, drive-up service or same-day delivery fulfilled by the local Target store. With Target’s earnings of US$1.69-billion or US$3.38 a share smashing expectations, reports of retailing’s death have been greatly exaggerated.
TGT - NYSE
Okay, so not every retailer is hitting it out of the park. Shares of Kohl’s cratered after the U.S. department store chain said sales plunged 23 per cent in the second quarter ended Aug. 1, hurt by pandemic-related store closings and weak back-to-school clothing sales amid uncertainty about when students in many parts of the country will return to class. With Kohl’s margins taking a hit as it discounts merchandise to clear out inventory, shareholders are getting a harsh lesson in the pitfalls of investing in retail.
CT REIT (STAR)
The coronavirus pandemic has been a disaster for many retail-focused real estate investment trusts. But for CT REIT, it’s been pretty much business as usual. The REIT – which derives most of its revenue from Canadian Tire and its affiliated banners – collected 97.3 per cent of rent for the second quarter and recently announced a 2-per-cent distribution increase. The hike – which came earlier than usual this year – “should leave the door open for another increase in [the second half], provided the operating environment does not meaningfully deteriorate,” Desjardins analyst Michael Markidis said in a note. REIT on!
Number of years it took Apple to reach US$1-trillion in market cap: 42. Number of years it took Apple to get from US$1-trillion to US$2-trillion: Two. Not that tech valuations have become divorced from reality or anything, but since mid-March Apple’s shares have more than doubled, making Apple the first U.S. company to crack the two-trill mark. With all the money they’re making, Apple investors might even be able to afford the latest overpriced iPhone without taking out a bank loan.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.