In the battle for the consumer, Walmart has emerged as a clear winner with Wall Street analysts. The major retailer’s sales for the fiscal third quarter rose nearly 9% and its earnings per share were $1.50, compared to $1.32 expected by analysts polled by Refinitiv. Conversely, Target posted a loss of earnings Wednesday, with profit falling about 50% in the fiscal third quarter. According to the report, the target shares fell about 12% in afternoon trading. Variations in the two companies’ business models may explain why their performance has been so strikingly different. “Walmart’s positioning in retail is unique. It differentiated itself from competitors through its Supercenter format and its value offering in a multitude of categories,” UBS analyst Michael Lasser wrote in a note Tuesday. “It has also experienced tremendous growth in e-commerce and solidified its position as the #2 viable player for Amazon in the space.” Lasser raised his price target to $170 from $158 at Walmart, implying a 17% upside from Tuesday’s close. Consumers gravitate towards value and are trading lower, buying less expensive versions of products, analysts noted, echoing Walmart’s comments on the earnings call. The retailer said its strength comes from its grocery business, which is larger than Target’s, as consumers have turned to Walmart to save on food. About 75 percent of its grocery market share gains came from households with incomes of $100,000 or more a year, Walmart said. That category of customers is usually more associated with Target’s business. “WMT continues to report market share gains in the food sector, which was the strongest category for the quarter, including a return to unit growth,” said Goldman Sachs analyst Kate McShane. “Overall merchandise softness continues to be linked to the Covid-winning categories (CE, Home and Basics), although category performance has also improved sequentially.” Walmart’s general product sales declined at a single-digit pace, its chief financial officer, John Rainey, said on its earnings conference call Tuesday. General merchandise is essentially anything but groceries. “The findings suggest the US consumer is holding up, but WMT is also benefiting from the decline in company-specific trade, and these consumer traffic gains likely helped broader merchandise,” said the Wells Fargo analyst. Edward Kelly. For Target, the softness of general merchandise is taking over. Higher prices keep consumers away from products they may not need right now. This differentiation between groceries and other products is also reflected in the latest data on retail sales, which increased by 1.3% in October compared to September and by 8.3% compared to the previous month. Grocery stores saw an 8% year-over-year increase, while sales of electronics and appliances fell 12%. Furniture sales increased only slightly. At Target, customer price sensitivity heightened during the last two weeks of October, its chief growth officer, Christina Hennington, said on a call with reporters. “It was a precipitous decline, and frankly, we saw these trends even in the first part of November,” she said. The retailer has made some progress in shedding its excess inventory, but the fiscal third quarter brought larger-than-expected declines, Target said. That means a hit to profits. Inventory is still up 14% year over year. “Now the consumer is getting softer in many of those discretionary categories, which will require more discounts to get rid of that product and inventory in the fourth quarter,” said Evercore ISI analyst Greg Melich on the company’s “Squawk on the Street.” CNBC. “Target’s third-quarter miss and downgraded guidance somewhat calls into question Walmart’s takeaway after earnings that the retail environment was solid ahead of the pivotal holiday shopping season,” L said. Davidson analyst Michael Baker.” A key question is whether TGT’s underperformance relative to WMT is a function of TGT’s greater emphasis on discretionary elements, or whether the difference is more on the execution side with yet another drive in down this year for TGT,” Baker wrote in a note Wednesday. Walmart acknowledged that the holiday season will be challenging in providing a more conservative outlook for the fourth quarter, with U.S. comparable sales up about 3 percent. excluding fuel. This falls short of Wall Street’s expectations of 3.5% growth, according to StreetAccount. However, Walmart has been resilient even during recessions and economics and periods of high inflation, Bank of America analyst Robert Ohmes wrote in a note Wednesday. It raised its stock price target to $165 from $155. “WMT significantly/consistently outperformed S&P over [the] over the past 5 recessions,” he said. “WMT has outperformed in periods of high inflation and grocers (such as KR) significantly outperformed in the highly inflationary period 1980-82 (with WMT now the largest grocer in the US, which that was not the case in 1980).” — CNBC’s Michael Bloom contributed to the reporting.