The retailer was tanking the stock after reporting first quarter consolidated earnings of $ 2.19 per share, well below analysts’ forecasts.
It is not just the last quarter that has reduced the target stock by about 22%. The retailer expects its operating income margin rate for the second quarter to “be in a wide range, centered around an operating margin rate of 5.3% for the first quarter.” The company said it expects lower-to-mid-unit revenue growth to continue in 2022. Target now expects its full-year operating income margin to be around 6%, lower than the previous target of 8%.
“Throughout the quarter, we have experienced unexpectedly high costs, driven by a number of factors, resulting in profitability that is far below our expectations and over time where we expect to work,” said Chief Executive Officer Brian Cornell in a statement.
Analysts had expected the target (ticker: TGT) to earn $ 3.07 per share on earnings of $ 24.48 billion. Last year it earned $ 3.69 a share on 24.2 billion in sales.
In general, supply chain and transportation pressures have recently weighed on profits in industries, and even higher inflation has led to higher sales, as consumers are forced to spend more to buy the same product.
The target report comes a day later
(WMT) provided mixed first-quarter results. Although the world’s largest retailer delivered better-than-expected earnings, it missed its earnings expectations and lowered its full-year forecast. The company noted that many of its customers are changing their behavior in the face of inflation, which has been at an all-time high for decades.
Walmart typically serves low-income customers. Also, Walmart’s management said in its conference call that not all consumers have changed their behavior significantly and that there has been some delay in high-ticket items such as gaming consoles. This may be good for the target, as buyers with slightly higher heels may still be more willing to spend.
The last government stimulus checks came out more than a year ago, and they are most missed by low-income Americans who are now fighting high prices for essentials. There was some hope that this group could at least pay off some of the high prices, due to the fact that as a group, they are also helped the most by rising wages. However, those wages did not rise as fast as inflation, a fact that was reflected in the Walmart report.
The goal is to rely less on low-margin groceries than on Walmart and it attracts richer customers. Therefore, if it also sees its buyers shifting toward cheaper options and retreating to its first quarter, it could mean that despite the relatively high savings rate and low debt ratio of Americans, inflation is having a greater impact on the income scale.
Investors will be especially interested to know from Target Management if the prudent departments of the company are still operating decently. Unable to cover groceries, consumers may not be able to bring back unnecessary items at first, but many have already bought lots of clothes and gadgets during the epidemic.
Other areas of interest are likely to increase Target’s ongoing carbside and in-store pickups, as it allows it to fill more online orders from the store বিকল্প cheaper alternatives than shipping — and any comment on the supply chain, which focuses on ongoing global disruption. .
Write to Teresa Rivas at [email protected]