Walmart, TJX Provide a Few Bright Spots in Q3 Results

Several of the nation’s largest retailers, including Target, Macy’s, Gap and BJ’s Wholesale Club, struggled during Q3, with all reporting net sales declines and all but one showing a fall-off in comparable store sales. Net sales for both Macy’s and Gap dropped 7% compared to the same period last year; Target did comparatively better, with a net sales drop of 4.3%, as did BJ’s, with a net sales decline of 2.8% and a slight comp sales increase of 0.3%.

Net sales for Walmart U.S.’s Q3, which ended Oct. 31, 2023, climbed 5.3% compared to the same period in 2022, reaching $159.4 billion. The retail giant was boosted by a 24% increase in ecommerce, led by pickup and delivery services, and was able to increase comp store sales by 4.9% during the three-month period. Walmart has been a consistently strong performer this year; its net sales for the nine months that ended Oct. 31 rose 6.2% compared to the comparable period in 2022, reaching $470.7 billion.

In contrast, Target’s net and comp sales both fell during its Q3, which ended Oct. 28, 2023, by 4.3% and 3% respectively. These results continue a trend that began in Q2, when Walmart achieved solid results but Target saw comparable store sales decline by 5.4%.

Value-based apparel retailer TJX continued to demonstrate the strength of the discount sector during a time of continued worries about the economy, despite slowing inflation and a still-strong jobs market. Net sales for Q3 of its 2024 fiscal year, which ended Oct. 28, 2023, jumped 9% compared to the same period the previous year, to $13.3 billion, and comp store sales increased 6%, helped by increases of 9% at HomeGoods and 7% at Marmaxx (referring to U.S. stores for both divisions).

“I am particularly pleased with the results at our Marmaxx and HomeGoods divisions, which delivered terrific comp sales increases entirely driven by customer traffic,” said Ernie Herrman, CEO and President of TJX in a statement. “Customer traffic was up across all divisions, our overall apparel sales remained very strong, and home sales were outstanding and accelerated sequentially versus the second quarter. Across our geographies and wide customer demographic, our values and exciting, treasure-hunt shopping experience continued to resonate with consumers.”

Apparel Retail and Department Stores Still Struggling

Disappointing Q3 results at four Gap brands reflect the company’s challenges as well as those facing apparel retail in general. Overall, Gap’s net sales of $3.8 billion for the three months ended Oct. 28, 2023 represented a 7% decline from the same period in 2022, with comparable sales dipping 2%.

Gap’s President and CEO Richard Dickson, who had previously headed successful brand revitalization efforts at Mattel (including for Barbie), came on board in August 2023, so it will take some time to determine the impacts of his policies. “We were pleased to see market share gains as well as improvements in both gross margins and operating margins, demonstrating our ability to drive operating and financial discipline,” said Dickson in a statement.

Gap’s Old Navy brand had the company’s strongest quarter; its net sales of $2.13 billion were just 1% lower than the same period the previous year, and comp sales also dropped by 1%. The Gap brand’s sales of $887 million were 15% lower than last year, but comp sales dipped just a modest 1%. Banana Republic had net sales of $460 million, down 11%, with comp sales down 8%.

Athleta’s $279 million in sales was down 18% compared to Q3 2022, with comp sales dropping 19%. The brand began shifting its business model in September 2022, moving further into resale and off-price assortments as it seeks to reach new customers and boost loyalty with a growing stake in the activewear and intimates segments.

Traditional department stores have been struggling with new consumer shopping patterns, and Macy’s is no exception: its net Q3 sales of $4.9 billion was down 7% compared to the same period in 2022; comp store sales fell by the same percentage. Macy’s saw 7% declines in both brick-and-mortar and digital sales during this period. Only the retailer’s Bluemercury division was able to generate a comp sales increase of 2.5%, compared to a 7.6% dip from the Macy’s nameplate and a 3.2% drop from Bloomingdale’s.