Target soars after topping Wall Street’s expectations
Target (TGT) stock is having its best day since 2019 with shares up more than 17% after reporting earnings on Wednesday morning.
It could have been worse, and it’s not like Wall Street was expecting much anyway.
In a nutshell, that’s Target’s third quarter earnings on Wednesday morning.
After almost two years of brutal results at the hands of execution missteps, rising retail theft and increasingly cautious consumer sentiments, Target clobbered lowered analyst estimates for sales, margins and earnings.
On a call with reporters, Target chairman and CEO Brian Cornell pointed to a “resilient” consumer managing to endure numerous financial headwinds from student loan repayments to nagging inflation.
But the caution on the call — and in Target’s holiday quarter EPS guidance — was palpable.
“In our research, themes like uncertainty, caution and management of budgets are top of mind,” said Cornell. “Consumers are still bringing up pressures like higher interest rates, increased credit card debt, and reduced savings rates have left them with less discretionary income, forcing them to make trade offs.”
Added Cornell, “For example, we see more consumers delaying purchases until the last moment, such as guests who previously bought sweatshirts or denim in August or September, but are now waiting until the weather turns cold.”
Below are the key metrics from Target’s report.
Net sales: -4.3% year over year to $25 billion, vs. estimates for $24.9 billion
Gross profit margin: 27.4% vs. 24.7% a year ago, vs. estimates for 26.6%
Diluted EPS: +36% year over year to $2.10, vs. estimates for $1.47 (guidance: $1.20 to $1.60)
Comparable sales: -4.9% year over year (last year it rose 2.7%):
Digital comparable sales: -6%
Store comparable sales: -4.6%
Inventory fell 14% from the prior year, led by a 19% reduction in the stock of discretionary categories like apparel and home goods.