The target rises after beating Wall Street expectations
Target (TGT) stock is having its best day since 2019, rising more than 17% following the earnings release Wednesday morning.
Yahoo Finance’s Brian Sozzi reports:
It could have been worse, and it’s not like Wall Street expected much anyway.
In short, this is Target’s third-quarter earnings as of Wednesday morning.
After nearly two years of brutal results due to execution errors, rising retail theft and increasingly cautious consumer sentiment, Target has crushed analysts’ lowered estimates for sales, margins and profit.
Target Chairman and CEO Brian Cornell, speaking to reporters, pointed to a “resilient” consumer who is able to endure numerous financial headwinds, from student loan repayments to sluggish inflation.
But the caution in the conference call — and in Target’s EPS forecast for the holiday quarter — was palpable.
“Our research focuses on issues of uncertainty, caution and budget management,” Cornell said. “Consumers are still applying pressure as higher interest rates, higher credit card debt and lower savings rates mean they have less discretionary income, forcing them to make compromises.”
Cornell added: “For example, we are seeing more consumers delay their purchases until the last moment, such as guests who previously purchased sweatshirts or jeans in August or September but are now waiting until the weather turns cold.”
Below you will find the most important metrics from the Target report.
Net sales: -4.3% YoY to $25 billion versus estimates of $24.9 billion
Gross profit margin: 27.4% versus 24.7% a year ago, versus estimates of 26.6%
Diluted EPS: +36% YoY to $2.10 versus estimates of $1.47 (Guide: $1.20-$1.60)
Comparable sales: -4.9% year-on-year (last year it was up 2.7%):
Digital comparable sales: -6%
Comparable store sales: -4.6%
Inventory fell 14% year-over-year, driven by a 19% decline in inventory in consumer goods categories such as apparel and home goods.
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