Consumer Companies Lower as Target Earnings Offset Retail Data -- Consumer Roundup

Shares of retailers and other consumer-services companies fell as weak earnings data offset strong retail-sales figures.

Spending at restaurants, retail stores and online-shopping platforms rose 0.2% in October from the prior month and are now up 4.6% for the year to date, according to the Commerce Department.

Target shares slid after the discounter's earnings projection for the holiday period lagged expectations. While Target succeeded in reviving same-store sales growth for the latest quarter, costs also rose. Target is feeling pressure from online competition, and particularly Amazon.com.

Even companies that seemed to be riding out the rise of internet shopping, such as TJX, have struggled to maintain growth recently. "Typically a bastion of comp [sales] consistency, [TJX's third-quarter] report clearly disappointed and with explanations centering on weather and fashion sounding uncomfortably close to its department store cousins," said analysts at brokerage Nomura Securities, in a research note.

Strategists at brokerage Morgan Stanley warn that consumer-discretionary sector usually peaks before the current stage of the economic cycle. "While talk of a tax cut may excite investors about the potential lift for consumer spending, we do not think it will lift the sector's performance given how late it is in this economic expansion," said the Morgan Stanley strategists in a note to clients.

Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

November 15, 2017 17:11 ET (22:11 GMT)