October retail sales inched down 0.1% M/M to $705.0B, compared with the 0.3% decrease expected and decelerating from the 0.9% increase in September (revised from +0.7%). Core retail sales, meantime, ticked up 0.1%, topping the -0.2% consensus and slowing from +0.8% in the prior month (revised from +0.6%). Health & personal care stores recorded the biggest M/M increase at 1.1%, followed by grocery stores at 0.7%. On the other hand, furniture stores registered the biggest decline at 2%, according to the U.S. Census Bureau. Total sales for August 2023 through October 2023 advanced 3.1% from the same period a year ago. Retail trade sales for October fell 0.2% from September and increased 1.6% from a year before. Nonstore retailers' sales gained 7.6% Y/Y, while gasoline stations retreated 7.5%. More on the U.S. Economy Producer Price Index unexpectedly (ETD, RH, LZB, WSM, ETSY, W, HD, M, DDS, KSS).
The Producer Price Index dipped 0.5% in October, compared with the 0.1% increase expected and the 0.4% rise in September (revised from +0.5%). The month-over-month decline marks the largest decrease in final demand prices since April 2020. On a year-over-year basis, the PPI rose 1.3%, significantly less than the 2.0% increase expected and the 2.2% Y/Y increase in September. Core PPI, which excludes food and energy, was unchanged M/M vs. +0.3% expected and +0.2% prior (revised from +0.3%). +2.4% Y/Y vs. +2.7% expected and +2.7% prior.
Target Corporation (TGT, Financial) soared in early trading on Wednesday after the retailer flew past consensus estimates with its Q3 earnings report. The retailer reported comparable sales decreased 4.9% during the quarter vs. -5.2% consensus. Declines in discretionary categories were partially offset by continued growth in frequency categories, most notably in Beauty. Same-day services grew more than 8%, led by more than 12% growth in Drive-Up. Total sales fell 4.2% during the quarter to $25.4B to top the consensus mark of $25.2B. Target's (TGT) operating margin rate was 5.2% vs. 3.9% a year ago. Gross margin rate was 27.4% of sales vs. 24.7% a year ago, reflecting lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs, and favorable category mix. SG&A expense rate was 20.9% vs. 19.7% a year ago, reflecting the de-leveraging impact of lower sales combined with higher costs, including continued investments.
Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway (BRK.B, BRK.A) exited its stakes in General Motors (GM, Financial) and Activision Blizzard (ATVI) during the third quarter, according to its latest 13F filing. The insurance and investment conglomerate also divested smaller stakes in Johnson & Johnson (JNJ), Mondelez (MDLZ), Procter & Gamble (PG), and United Parcel Service (UPS). Berkshire (BRK.B) trimmed its holdings in Chevron (CVX), HP (HPQ), and Amazon (AMZN), among others. The divestment of its Activision (ATVI) stake completes Buffett's merger-arbitrage play on the video-game maker's stock. Meanwhile, its largest holding, Apple (AAPL), stayed unchanged at ~915.6M shares, the filing showed. The value of Berkshire's (BRK.B) disclosed investments fell 10% sequentially to $312.8B. As of Sept. 30, about 78% of Berkshire (BRK.B) $318.6B of equity holdings were concentrated in American Express (AXP), Apple (AAPL), Bank of America (BAC), Coca-Cola (KO), and Chevron (CVX).
ZIM Integrated (ZIM, Financial) shares plunged 10% premarket on Wednesday after the cargo shipping firm reported Q3 results that fell short of Wall Street estimates. The shipping company incurred a massive net loss of $2.3B for the quarter, compared to net income of $1.17B in the year ago quarter. Its bottom line was weighed down by a non-cash impairment loss of $2.06B. Revenues, too, fell 61% year-over-year to $1.27B, with carried volume of 867K TEUs registering a slight year-over-year increase. Average freight rate per TEU in the third quarter was $1,139, a year-over-year decrease of 66%. CEO Eli Glickman noted "demand remained weak and freight rates continued to deteriorate" in Q3, and the company's outlook for freight rates remains negative for the near future, leading to the impairment loss. ZIM (ZIM) revised its guidance for the full year following the disappointing Q3 performance. It now expects an adjusted EBITDA of $900M-$1.1B.
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