Posted on 08/17/22
| News Source: Associated Press
Target reported solid sales for the fiscal second quarter but its profit plunged nearly 90% after it was forced to slash prices to clear unwanted inventories of clothing, home goods and electronics.
In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as the pandemic eased.
Shares fell nearly 4%, or $7.15 to $173.04, on Wednesday.
Retailers were blindsided by the lightening-fast switch from spending on goods for the home, like TVs and small kitchen appliances, to dinners out, movies and travel. Adding to that shift is surging inflation. In the first quarter, Target’s profits tumbled 52% compared to the year-ago period.
Target reported second-quarter net income of $183 million, or 39 cents per share, for the three month period ended July 30. That’s far short of the per-share profit if 79 cents that Wall Street had expected, according to a survey by FactSet.
It was also down from the $1.82 billion the company earned last year in the same period.
Revenue rose 3.5% to $26.04 billion. Analysts were expecting $26.03 billion, according to FactSet.
Store comparable sales increased 1.3% on top of 8.7% growth last year. Online sales rose 9% following growth of 9.9% last year.