“In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty,” said CEO Brian Cornell.
Target Corp. (TGT) – Get Free Report posted much weaker-than-expected third quarter earnings Wednesday, and lowered its full-year profit forecast, amid what the retailer called a “meaningful shift” in spending habits linked to surging inflation and broader economic uncertainty.
Target said adjusted earnings for the three months ending in October were pegged at $1.54 per share, down 49.2% from the same period last year and well shy of the Street consensus forecast of $2.12 per share.
Group revenues, Target said, rose 3.3% to $26.5 billion, just ahead of analysts’ estimates of a $26.4 billion tally. Target said same-store sales rose 3.2%, topping the Refinitiv forecast of 2.8%, while gross margins narrowed 330 basis points from last year to 24.7%
Looking into the final months of the group’s fiscal year, Target said it sees a low single-digit decline in same store sales over the holiday quarter, with an overall operating margin of 3%.
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“In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty,” said CEO Brian Cornell. “This resulted in a third quarter profit performance well below our expectations.”
“While we’re ready to deliver exceptional value for our guests this holiday season, supported by the decisive inventory actions we took earlier this year, the rapidly evolving consumer environment means we’re planning the balance of the year more conservatively,” he added. “We’re also taking new actions to drive efficiencies now and in the future, optimizing our operations to match the scale of our business and drive continued growth.”
Target shares were marked 14.4% in pre-market trading immediately following the earnings release to indicate an opening bell price of $153.15 each, a move that would extend the stock’s year-to-date decline to around 34%.
