TARGET: Hits the Bullseye

On Wednesday, Target surpassed Wall Street's expectations for quarterly sales and significantly exceeded earnings forecasts. This success was mainly due to increased purchases in frequently bought categories, such as food and beauty, which compensated for the overall decline in consumer spending. Target experienced a decrease in comparable sales for the second consecutive quarter. This industry measure, also known as same-store sales, excludes the effects of new store openings, closures, and remodeling.

During the third quarter, Target's total revenue decreased from the $26.52 billion reported in the same period last year. Year-over-year, comparable sales saw a decline of nearly 5%, attributed to a reduction in purchases of non-essential items by customers. Additionally, digital sales saw a 6% decrease compared to the previous year. Despite facing sales difficulties, the retailer demonstrated improvement in recovering its profits.

In the third quarter, its net income surged by approximately 36% to $971 million, equivalent to $2.10 per share, up from $712 million, or $1.54 per share, in the same period the previous year. However, total revenue declined from the $26.52 billion reported in the year-ago period.

Earnings:

EPS: $2.10 vs. $1.48 expected

Revenue: $25.4 billion vs. $25.24 billion expected

🎯 GRIT TAKE: The retail sector is experiencing a… upgrade to VIP to read the full GRIT take. Click below!

GOOGLE: Courtroom Confessions

On Tuesday, Sundar Pichai, the CEO of Alphabet, acknowledged that Google gives Apple a 36% share of the search revenue generated through Safari as part of their agreement to make Google the default search engine. This arrangement is a central element of the antitrust allegations brought by the Justice Department.

This information surfaced during a different legal case, where Google is being sued by Epic Games, the creator of Fortnite. During antitrust proceedings in Washington, D.C., an expert speaking for Google inadvertently disclosed this percentage in public court on Monday. The attorney representing Epic Games then claimed that Google compensates Samsung, the leading hardware partner for Android, with less than half of the amount it pays Apple.

In response, Pichai stated that although he wasn't entirely sure, such a scenario could be true. In 2022, Google's expenses for Traffic Acquisition Costs (TAC) amounted to approximately $49 billion. These TAC expenditures cover all payments Google makes to businesses like Apple and Samsung to position its search engine prominently for users.

BIDEN: Xi, Friends Again?

On Wednesday in San Francisco, a meeting is scheduled between U.S. President Joe Biden and Chinese leader Xi Jinping, aiming to ease growing trade and military tensions between the U.S. and China. However, the Biden administration is tempering expectations regarding any significant breakthrough from this encounter. Wall Street will have all eyes on the meeting as they will be looking for some common ground. China comes to the negotiation table at a time when its economy has slowed down. The manufacturing sector in Asia is currently facing a decline in activity, reaching levels last witnessed during the height of the COVID-19 pandemic in 2020.

The Global Supply Chain Volatility Index by GEP indicates that suppliers in Asia are encountering the highest increase in unused capacity since June 2020.

This trend is occurring as the region's economic growth remains muted, coupled with a decrease in demand from the U.S. market, where consumers are reducing their expenditures.

Headlines You Need To Know: 🎙

• Citigroup begins layoffs

• Mortgage demand climbs to the highest level in 5 weeks

• PGA Tour is offering equity to its players

• House passes bill to avoid government shutdown

• Record UAW deal isn’t getting full support

• Ken Griffin sees Miami replacing NYC as finance capital

• Buying bonds in a rocky market

• The soft landing is coming into view

Yahoo’s Costly Choice 💲

This company made a horrible mistake by choosing Mark Cuban over Google and Facebook. Yahoo was at the top of the world in 2000, being valued at $120 billion. But this would come to a quick end. Yahoo wanted to get into search engines, so they looked into acquiring Google. Unfortunately, they turned down Google’s offer twice, which was $1 million in 1998 and $3 billion in 2003. Instead, they chose to acquire Mark Cuban’s startup broadcast.com for $5.6 billion, which was completely shut down a few years later. 

Mark Zuckerberg was on the verge of selling Facebook to Yahoo for $1 billion, but Yahoo claimed that Facebook wasn’t worth $1 billion. In 2008, Microsoft offered to buy Yahoo for $44 billion, but Yahoo was insulted by the offer. Unfortunately, they sold to Verizon in 2016 for $4 billion. 

Chart of the Day

📊 US Federal Debt Maturing in 12 Months

$8.2T of US debt will be maturing in the next 12 months

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