Target Corp (NYSE:TGT) stock fell 0.81% (As on November 16, 11:21:37 AM UTC-4, Source: Google Finance) after the company reported a surprising profit gain in the third quarter, defying expectations with adjusted earnings that outstripped forecasts. The company’s disciplined approach to inventory management has been credited for the unexpected boost in profitability. For the quarter ending October 28, Target posted net income of $971 million, a significant increase from $712 million, reported in the same period last year. As of October 28, Target has successfully reduced its cost of sales by 7.8% to $18.15 billion and trimmed its inventory value by 13.9% from last year to $14.73 billion. Comparable sales declined 4.9 percent in the third quarter, reflecting a comparable store sales decline of 4.6 percent and a comparable digital sales decline of 6.0 percent. For the trailing twelve months through third quarter 2023, after-tax return on invested capital (ROIC) was 13.9 percent, compared with 14.6 percent for the trailing twelve months through third quarter 2022. Target has generated more than $5.3 billion of operating cash flow, compared with approximately $550 million in 2022.

TGT in the third quarter of FY 23 has reported the adjusted earnings per share of $2.10, beating the analysts’ estimates for the adjusted earnings per share of $1.48, based on a survey of analysts by LSEG, formerly known as Refinitiv. The company had reported fall in the adjusted revenue to $25.4 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $25.24 billion. Third quarter operating income of $1.3 billion was 28.9 percent higher than last year, driven by a higher gross margin rate. Third quarter operating income margin rate was 5.2 percent in 2023, compared with 3.9 percent in 2022. Third quarter gross margin rate was 27.4 percent, compared with 24.7 percent in 2022, reflecting lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs, and favorable category mix. These benefits were partially offset by higher inventory shrink.

Additionally, the Company paid dividends of $507 million in the third quarter, compared with $497 million last year, reflecting a 1.9 percent increase in the dividend per share. The Company did not repurchase any stock in the third quarter.  As of the end of the quarter, the Company had approximately $9.7 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in August 2021.