On Thursday, Bank of America highlighted the ongoing resilience of consumer spending in November 2024. According to the bank’s aggregated credit and debit card data, there was a 0.6% increase in spending per household compared to the same period last year. The report also noted that spending on holiday items around Thanksgiving saw a 6.1% rise from the 2023 holiday season.
The travel sector also demonstrated robust activity, with gasoline transactions via Bank of America cards increasing by 2% year-over-year during the Thanksgiving period. This uptick suggests a significant number of road trips were undertaken.
Despite this increase in transactions, the total amount spent on gas decreased by 4% year-over-year, attributed to lower gas prices, which in turn have positively impacted consumer budgets. Additionally, air travel has remained strong, as evidenced by Transportation Security Administration (TSA) checkpoint data. According to InvestingPro analysis, Target maintains strong financial health with a "GOOD" overall rating, suggesting resilience in the current retail environment.
Bank of America’s internal deposit data reveals after-tax wage growth, suggesting consumers may have the financial capacity to maintain their spending levels as the year 2025 approaches. While savings buffers and credit card spending might be reduced, the bank believes that consumers have not yet depleted their resources, indicating a potential continuation of spending resilience into the new year.
In other recent news, Target Corporation (NYSE:TGT) has been in the spotlight with Bernstein maintaining its Market Perform rating while reducing the price target to $120. This adjustment follows a conservative outlook on the company's earnings potential. Despite concerns about long-term performance and a dip in Black Friday traffic, Target maintains strong fundamentals with $107.6 billion in revenue over the last twelve months.
In contrast, research firm DA Davidson projects a positive outlook for the retail sector in 2025, including a 4% increase in retail sales and margin improvements. This positive outlook extends to Target Corporation, along with Walmart (NYSE:WMT) Inc. and other retail giants. However, Target's Black Friday performance was mixed, with certain promotions and exclusive product releases drawing crowds, but general shopper turnout did not meet expectations.
Meanwhile, Walmart Inc and Amazon.com (NASDAQ:AMZN) broke records with their holiday sales, outpacing competitors like Target. Despite this, Target shares saw a rise due to strong toy traffic and holiday promotions. Although there were some challenges in store sales, digital sales, and supply chain margins, Target reported positive developments including a 6% increase in beauty category sales and an 11% rise in digital sales.
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