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big story with Target even a couple of years ago was their struggles with inventory and they were able to correct that. Does Cornell have a pretty good playbook for how to right size inventory moving forward? Or is this something that maybe we should be a little bit nervous going ahead? No,

I think he does. I mean, I think any CEO worth his or her salt knows that, I mean, inventory in this game, when you're talking about big box retailers, I mean, inventory is just one of the tougher parts of managing these businesses. And it ebbs and flows, right? It's not just some sort of constant line one way or the other. And so you see some good stretches and some bad stretches. I think overall, he's done a very good job of managing this business. With that said, it is something worth keeping in mind. I

want to zoom in on a couple metrics that at least stuck out to me. So traffic within stores was up about two and a half percent, but in-store comp sales down about two percent for the quarter. So you've got more people coming to the store, but those people are buying less. What kind of a problem is that for Target and how do you fix it? Is this a merchandising issue? Is it more an indicator of a macro problem, something else? Well,

I definitely don't think this is just a target specific issue. I mean, you noted a good point there. I mean, traffic was up, however, comps down. And if we look at tickets, I mean, there was a 2% decline in average tickets. So yes, people are spending less. And if we go back to, you know, a point that he noted in the call, consumers are becoming increasingly resourceful. And he made this point time and time again. I mean, they know that there are deals out there. I mean, consumers everywhere, we're all looking for deals. And now it seems like more than ever, we consumers are willing to wait and be a little bit more patient and try to find those deals. And we're willing to look, we're willing to search across multiple retailers to find those deals. And so that's something that plays into not only a target, I mean, it plays into virtually every one of these retailers. And so it's something that they're going to have to deal with.

So while you had same-store in-store sales decline, comparable digital sales rose about 11%. But the thing is that those sales have a higher cost of fulfillment, and that drew down Target's operating margin. Can you help me make sense of this? Because I thought we were supposed to believe that digital ordering is more efficient. It's the future. That's how you can kind of, you can trim expenses a bit, but that doesn't seem to be what's actually happening here. Well,

I think you're right. Digital ordering is the future for the most part, and it can be more efficient depending on the operation. But I think this really goes to scale, right? Scale, I think, is sort of the word here that comes into play. And so to me, you think of e-commerce giants in the space. I mean, the obvious one being Amazon, right? I mean, for so long, Amazon was just in the business of ultimately kind of losing money, right? And everybody kind of wondered, how in the world is Amazon garnering this valuation when they're not making any money? And I mean, the short answer was they were really building out this e-commerce operation and thinking longer term. But look at some of the younger e-commerce players today, right? I mean, think of companies like Chewy, right? Chewy, still working towards really getting that model towards sustainable and growing profitability. Wayfair, another good example. Same thing. They're just in very early days in building out the infrastructure that is required to ultimately exploit and take advantage of that e-commerce model, because it ultimately can be very profitable, particularly if you have membership models that keep people coming back for more. But it just takes a lot of money in the early days to get that infrastructure in place. And when we talk about these legacy brick and mortars, which Target is one of those, it's just, it's just, it's a lot of work. So, so I think they're absolutely making the right call and doing it, but there will be some hiccups along the way for sure. It

kind of seems to me like Target is at a little bit of a fork in the road and you've got two paths ahead of it. One is kind of being chartered by Amazon and Walmart, these two big e-commerce players. On the other path, you've got like the TJX stores, which we're going to talk about more in a second. And while they have online ordering, they really play more to this in-person treasure hunt style type approach. I see Target as kind of straddling both of those styles and kind of being in the middle. On the one hand, you could think that that's a massive opportunity for them. On the other hand, okay, look at their stock this morning, it's down over 20% on the latest performance. Does Target have to pick one path over another, or can it actually create a strategic advantage by being in

the middle of those two plays? I think in Target's case, they don't have to choose one path or the other. And I think part of that is just due to the nature of what Target does, right? I mean, they shine in discretionary and they also are taking advantage of the grocery space. We talk about companies like Walmart. I mean, one of Walmart's biggest advantages beyond the scale that the company has is that they have such a large presence in grocery, for example. And Target does also participate in that grocery segment. And that, I think, is really important. I think for businesses like Target and Walmart and others, the ultimate key is going to, they're going to need to focus on that word omni-channel, right? And we've heard that word many, many quarters, many, many, over many, many years now. Home Depot, Target, Walmart, the like, they are focusing on being omni-channel. I think for legacy brick and mortars, that's been the real big pivot, right? Amazon, for example, didn't really have to worry about the omni-channel thing because they were never really born from being a brick and mortar that had to make that pivot. When you have your Walmarts and targets of the world that are having to make that pivot, that's fine. They can do that. But I think for these businesses to ultimately be successful, it's less about choosing one or the other and ultimately trying to figure out how to be something for everyone or everything for everyone, right? But that's ultimately what Omnichannel is. Whether it's folks going in the store, whether it's ordering online and having it delivered, or whether it's ordering online and going to the store and picking it up in the parking lot. That is a very difficult strategy. It's very costly in the near term. It's very difficult, I think, in the early days for these legacy brick and mortars. But again, I think it is the right strategy to continue focusing on that Omnichannel strategy. I

want to talk for a second about guidance. Backward looking accounting is an art in and of itself, but forward looking projections in that you're thinking not just about numbers and what it makes sense to estimate moving forward based on what's already happened in the past. But you've also got to think about PR, investor relations, how you communicate these changes that you're anticipating, be they positive or negative. I'm asking about this because this morning Target cut its full year guidance. But just three months ago in the last quarter, the company raised its guidance. So how exactly does management land on these forecasts and what kind of game are they playing in spelling that out for investors? Well,

it's definitely an art form for sure. And I wouldn't put them all in the same sort of sandbox, so to speak. I mean, I think, you know, you've got some companies that prefer a sandbag, they want to set low expectations and then try to exceed those expectations. But ultimately, these companies are they're going with the data that they have at the moment moment. Right. I mean, these management teams are just going with with the data that they have at the time. And and. It's it's always worth remembering quarter in and quarter out, you see things change, right? The dock worker strike, I think, is a great example of something that wasn't necessarily foreseen. It came as a little bit of a surprise. And I think we could all argue that it was a little bit of a surprise that it was resolved so quickly, at least in the near term. I think there's still some things that they're trying to work out there. But yeah, I mean, it's absolutely more of an art form when it comes to forward-looking guidance. And I think the best thing investors can do in regard to that is just paying attention to what these management teams say kind of over the stretch of earnings seasons, right? Look at a full year's worth of earnings releases. Look at two years worth of earnings releases and see how do these management teams approach that forward guidance? Because there's some companies out there that just really try to stay away from that guidance because they're like, we don't want to play that game. We're trying to create a little bit more of a shareholder base that's focused on that longer haul as opposed to sort of that quarter by quarter game that these teams play. So it absolutely is worth remembering that not every company is the same in this regard.

I want to turn real quickly to another retailer, this one, TJX. That's the parent company of TJ Maxx, Marshalls, HomeGoods, Sierra, a number of retailers. They reported this morning as well, reported higher sales, higher net income, spoke about, quote, a strong start to the holiday shopping season. And yet, management lowered EPS guidance for the fourth quarter. So why is this? If the CEO can say, hey, the holiday shopping season's off to a great start, but we're actually not expecting great stuff moving forward, how do those two things work together? Well,

and that's interesting because it seems like they're looking at the fourth quarter as perhaps a little bit more challenging. There's some costs flowing through the business that weren't necessarily reflected from a year ago. And that's just something we know is always going to come into play. I think it's worth noting that they did actually bump up earnings per share guidance for the full year. So, you know, we're looking at fourth quarter versus the entire year. I mean, if we look back to just a quarter ago, they had called for earnings per share for the full year in the $4.09 to $4.13 range. In this quarter, they actually bumped that up to $4.15 to $4.17. So I think I wouldn't worry so much about the nitpicking on the quarter. Again, I mean, TJ Maxx and TJX companies, they're a company that are definitely going to be dealing with a more challenged consumer. It's always funny to me to hear them talk about the weather. Weather is one of those things that every retailer is going to have to deal with, but I guess it impacts some more than others. But again, I mean, I think you look at that fourth quarter guide, maybe it's a little bit lower than what analysts were looking for. But as I've said on this show before, I'm not necessarily so worried about what analysts are looking for. I generally focus more on what management is calling for and then making sure that management is hitting those goals that they set.