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Target (TGT) profits for the first quarter of 2022

Target reported quarterly earnings on Wednesday, well below Wall Street expectations, as the retailer faced higher fare costs, higher returns and lower-than-expected sales of discreet items from TVs to bicycles.

The company’s shares fell about 25% at the beginning of trading.

Here is what Target said about the financial first quarter ending April 30, compared to Refinitiv’s consensus estimates:

  • Earnings per share: $ 2.19 adjusted against $ 3.07 expected
  • Revenue: $ 25.17 billion compared to $ 24.49 billion expected

The national retailer, known for its cheap, elegant clothing brands, home decor and more, has gone through a particularly high sales period. A year ago, buyers had extra dollars in their pockets from stimulus checks and reflected a sense of optimism with their purchases as they received their first Covid-19 vaccines.

Sales increased compared to that period last year. Comparable sales, a key measure that tracks sales in stores open for at least 13 months and online, rose 3.3% in the first quarter. That’s more than a 23% increase in comparable sales in the previous year quarter and is 0.8% higher than Wall Street forecasts, according to StreetAccount estimates.

In Target stores and on its website, the traffic increased by 3.9%.

Even so, CEO Brian Cornell said the company had lost its mark as its profits “were accompanied by unusually high costs”.

“While we saw healthy top-line growth in the quarter, we were less profitable than we expected or intended to be over time,” he told a news conference.

Among the challenges, Target said, profits were affected by the stock that arrived too early and too late, compensation and the number of funds raised at distribution centers, and a combination of merchandise sales that looked different than before.

Target results reflect Walmart’s quarterly earnings performance. Walmart said Tuesday it also lost gains, citing higher inventories and more cost pressures. Shares of Walmart fell more than 11% on Tuesday, reaching a 52-week low.

Target reiterated its revenue forecast, which requires medium-single-digit growth this year and beyond. It did not provide an estimate of earnings per share.

The company’s net profit for the quarter fell to $ 1.01 billion, or $ 2.16 per share, from $ 2.1 billion, or $ 4.17 a share, a year earlier. Excluding data, Target earned $ 2.19 per share, 88 cents less than the $ 3.07 expected by analysts surveyed by Refinitiv.

These adjusted earnings per share fell sharply – down almost 41% from last year.

Total revenue rose to $ 25.17 billion from $ 24.20 billion a year ago, above analysts’ expectations of $ 24.49 billion.

Target vs. Walmart

While Target and Walmart lost their profit margins by a wide margin, they differed in the descriptions of the American consumer.

Walmart Chief Financial Officer Brett Biggs told CNBC that the bulk retailer has seen some low-budget customers exchange meat with the store’s brand and buy half a gallon of milk instead of whole milk. Others, he said, are looking for new game consoles and patio sets.

Target CEO Cornell, meanwhile, said in a media call that the company sees a healthy consumer but one who lives – and spends – differently while continuing some pre-pandemic habits.

For example, Cornell said toy sales stood out in the first quarter and rose in high single digits as families resumed major children’s birthday parties. Luggage sales increased by more than 50%, he said.

On the other hand, sales of items such as televisions, kitchen appliances and bicycles declined as consumers shifted their spending to experience-based shopping, such as travel bookings and gift shopping for restaurants, he said.

Cornell, however, warned that cost pressures “will continue in the near future”, stressing that some are beyond the company’s control. One of those factors is the price of gas, which hit a national average of $ 4,523 per gallon on Tuesday, according to the AAA.

However, he said, he will continue to invest in the business, open new stores and said that Target’s bright, long-term course remains the same.

With inflation at a nearly four-decade high, Chief Financial Officer Michael Fiddelke told reporters that Target would focus on value-added, even if it means absorbing certain costs. He said the rise in prices “continues to be the last lever we pull”.

“We have gained so much confidence over the last several years with investments in price and we are not going to trade it in the current environment,” he said.

Target (TGT) profits for the first quarter of 2022

Source link Target (TGT) profits for the first quarter of 2022

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