Lowes Is Getting Beat Up By Home Depot, Plus Target Beats Q3 Earnings Expectations

By 11.17.16

morning-brew-new
“Fraud is not a trade secret. I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing” — Tyler Shultz, who blew the whistle on Theranos, the once-hot blood testing startup that imploded for forging research and test results.

Market Snapshot

  • U.S. markets finally fell yesterday, with financials leading the drop despite a rally by tech stocks as investors continue to weigh Trump’s policy outlook and new appointees
  • Shares of H&R Block fell 7% following the president-elect’s new tax proposal that would make it significantly easier for Americans to file their own taxes, cutting down on the need for tax prep companies

Target’s Bullseye

…The retailer reported stronger than expected Q3 earnings…and just in time for the holiday season. After a rough second quarter due to disruptions from CVS’s acquisition of its pharmacy business, Target (+6.42%) beat profit expectations by an impressive 25%. Plus, same-store sales only fell 0.2% compared to a forecasted decline of 1%. CEO Brian Cornell attributes the success to a strong back-to-school season and Target’s new strategy of differentiating from competitors (like Walmart) by focusing on kids’ items and clothing. And that’s not all—Target also saw its e-commerce sales grow by 26%. Happy holidays.

Everybody Makes Mistakes

…But Facebook? The once infallible social media powerhouse (-0.73%) found even more problems with its ad metrics. To say it’s been a hectic week for Facebook would be an understatement. After facing stiff criticism for featuring fake news during an election year, the social network admitted yesterday that it discovered bugs in its system that led the site to exaggerate its video view counts. For advertisers, that’s a big no-no. Facebook plans to avoid future mistakes by forming a measurement council and adding third-party verification measures to ensure it gives advertisers accurate data. Now, exhale.

Microsoft X LinkedIn Might be Out

…Quick, time to suck up. Microsoft has offered concessions to European Union antitrust regulators over its massive $26 billion deal to acquire LinkedIn to help smooth the acquisition. Why now? Though the deal was announced in June, Microsoft and the EU met last week, where concerns were voiced over what might be Microsoft’s largest acquisition in history. Why the worry? Nerves over a deal this big and its effect on competition. What now? The Commission is waiting for feedback from rivals and customers with a final call deadline of December 6. We’ll keep you posted.

When Mom and Dad Compare You to Your Brother

…And he’s a star quarterback. Well, that’s kinda how Lowe’s (-2.94%) is feeling sitting in Home Depot’s shadow. Lowe’s dropped earnings yesterday that were not only down 48.5% year over year, but more importantly diverged from Home Depot’s outlook. How so? Home Depot’s sales have been killing it thanks to a growing housing market, and now Lowe’s investors are feeling like they invested in the wrong home-improvement retailer. While it’s probably fairer to compare Lowe’s to the state of the entire retail industry instead of Home Depot, all’s fair in the stock market.

Other Stories

Economic Calendar

The Bachelor: Secretary of Commerce Edition

Here at the Brew, we try to stay away from politics. But where business is concerned, we can’t resist. President-elect Donald Trump is remodeling his cabinet, and the Secretary of Commerce is up for grabs. The position is responsible for promoting job growth and economic growth, so it’s a pretty big deal. Here are some top candidates and their views:

  • Wilbur “King of Bankruptcy” Ross — Billionaire investor and private equity giant with expertise in the steel, coal and textile industries. Ross is reportedly the current frontrunner and his key philosophy is based on protesting NAFTA.
  • Dan “Union-Free” Dimicco — Current chairman of Nucor, the largest steel producer in America. Dimicco has three main focuses: manufacturing, eliminating unions and preventing outsourcing.
  • Lewis “Lew” Eisenberg — Finance chair for the RNC. Eisenberg is also the co-founder of private equity firm Granite Capital, and served as the chairman of the Port Authority of New York and New Jersey during the 9/11 attacks.
  • Peter “Gregory” Thiel — Legendary tech leader and founder of PayPal. You may remember him from his historic speech at the Republican National Convention.
  • Linda “WWE” McMahon — Former WWE executive and two-time U.S. Senate candidate. McMahon was a Republican mega-donor this election and has served on the Connecticut Board of Education.
  • Mike Huckabee — Former governor of Arkansas and presidential candidate. Although Huckabee did once tweet that Trump was a “car wreck” and has voiced support for NAFTA, Huckabee agrees with Trump on blocking the Trans-Pacific Partnership. What a cast of characters.

Interview Question of the Day

Julie has a toaster with two slots that toasts one side of each piece of bread at a time, and it takes one minute to do so. If she wants to make three pieces of toast, what is the minimum amount of time she needs to toast them each on both sides? (Answer)

Startup of the Day

Shazam, originally founded in 2002, created one of the world’s first iPhone apps. The app now takes an average of four seconds to “listen” to recorded music and match it against its database of 35 million songs. Not half bad. Shazam has a self-reported 100 million monthly active users, up from 70 million in 2013. According to its latest valuation round in January 2015, the startup is worth $1 billion. Shazam!

Food for Thought

Google’s G Suite apps just got more business friendly: Google Docs, Sheets and Forms will now allow you create custom templates. The addition of template support is yet another example of Google trying to make its service more attractive to business users.

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