John Zolidis

John Zolidis, founder and president of Quo Vadis Capital Inc., compared the disappointing results to 2008, when the economy was weakening and Target was losing ground against Walmart (for similar product mix reasons as this week).

“We had expected that Target was better positioned for consumer weakness this time around, due to its improved competitive position and upgraded capabilities,” Zolidis wrote in an investors note Wednesday. “But, it certainly does not feel that way, looking at this year’s performance.”

Veteran analyst John Zolidis of Quo Vadis Capital argues that transactions might have dropped 5.4%, based on his calculations, a number arrived at by modeling transactions as the difference between the price and sales increases. Zolidis, who has a Sell rating on the stock, wasn’t the only analyst raising questions about the impact of price increases on traffic. BMO analyst Andrew Strelzik, who rates the stock a Hold, noted that “[questions] about value proposition gain steam as traffic declines accelerate. Still, 72% of the 36 analysts tracked by FactSet rate the stock as Buy or equivalent.

Quo Vadis Capital President Zolidis was among the few equity analysts, who sounded the alarm on Luckin Coffee’s accounting problems early on, and he remained bearish while the company was under bankruptcy.

But he turned bullish after the company emerged from bankruptcy in April of 2022 and continues to be. Most notably, Zolidis thinks that the new company that emerged from bankruptcy early this year is a different company in many respects. First, it is almost free of debt, after redeeming $110M of 9% debt securities. “It’s a rare situation for a company that emerged for bankruptcy recently,” he told International Business Times in an email. “In addition, it’s a good indication that management feels confident about the company’s financials in the future.”