Goal Quarterly revenues reported Wednesday were well below Wall Street’s expectations as retailers dealt with higher fares, higher price cuts, and lower-than-expected sales of discretionary goods from TVs to bicycles.
Stocks fell about 16% in pre-market trading.
Compared to Refinitiv’s consensus estimates, Target reported the following in the first quarter of the fiscal year ending April 30:
- Profit per share: Adjusted $ 2.19 vs. Forecast $ 3.07
- Revenue: $ 25.17 billion vs. $ 24.49 billion forecast
Nationwide retailers known for cheap and chic apparel brands and upholstery Especially high sales period.. A year ago, shoppers pocketed extra money from stimulus checks, reflecting optimism in their purchases when they first got the Covid-19 vaccine.
Sales increased compared to the same period of the previous year. Comparable sales, a key indicator of tracking sales for stores that have been open for at least 13 months and are open online, increased 3.3% in the first quarter. This is above Wall Street’s forecast of 0.8%, according to Street Account estimates, in addition to a 23% increase in comparable sales over the same period last year. Traffic increased by 3.9% at Target stores and their websites.
Still, CEO Brian Cornell said the company’s profits were “abnormally expensive” and therefore unmarked.
“Although the top line grew steadily this quarter, it was less profitable than expected or planned in the long run,” he said in a phone call with reporters.
In the challenge, Target said profits were hit by a combination of inventories that arrived too early or too late, rewards and staffing at distribution centers, and product sales that looked different than before.Results of mirrored targets WalmartQuarterly financial results.Walmart on Tuesday too Missed revenue due to increased inventory and a lot of cost pressure..
Target has repeated earnings forecasts for mid-single-digit growth since this year. No estimate of profit per share is provided.
Target net income for the quarter fell from $ 2.1 billion ($ 4.17 per share) in the year-ago quarter to $ 1.01 billion ($ 2.16 per share). With the exception of items, retailers earned $ 2.19 per share. That’s 88 cents below the $ 3.07 forecast by analysts surveyed by Refinitiv.
These adjusted earnings per share fell sharply, down nearly 41% year-over-year.
Total revenue increased from $ 24.20 billion a year ago to $ 25.17 billion, surpassing analysts’ expectations of $ 24.49 billion.
Both Target and Wal-Mart have largely missed profit expectations, but American consumers have different explanations.
Wal-Mart Chief Financial Officer Brett Bigs sees large retailers seeing under-budget customers trade down Deli Meat to their store brand and buy half-gallon milk instead of full milk. I told CNBC. He said some others are looking for new consoles and patio sets.
Meanwhile, target CEO Brian Cornell said in a media call that the company is looking at healthy consumers, but living and spending are different while resuming pre-pandemic habits.
For example, Cornell University said toy sales stood out in the first quarter, showing high-single-digit growth as families resumed larger children’s birthday parties. Luggage sales have increased by more than 50%, he said.
Meanwhile, sales of goods such as TVs, kitchen utensils, and bicycles fell as consumers shifted their spending to experiential purchases such as travel bookings and restaurant gift card purchases, he said.
However, Cornell University warned that cost pressures “will continue in the short term,” some emphasizing that the company is out of control. According to AAA, one of these factors is the price of gas, with a national average of $ 4.523 per gallon on Tuesday.
Still, he said he continued to invest in the business, opened new stores, and Target’s bright long-term trajectory remains unchanged.
With inflation reaching nearly 40 years, Chief Financial Officer Michael Fiddelke said in a call with reporters that Target will focus on providing value, even if it means absorbing costs. He said price increases “will continue to be the last resort we draw.”
“We have gained a great deal of confidence in our investment in prices over the last few years and we are not going to trade it out in the current environment,” he said.
As of Tuesday’s closing price, Target’s share has fallen by about 7% so far this year. The stock closed on Tuesday at $ 215.28, bringing the company’s market value to $ 99.82.