Target Corp (NYSE:TGT) stock fell 2.19% (As on May 18, 11:15:10 AM UTC-4, Source: Google Finance) after the company forecast a grim second quarter as consumers shun non-essentials such as electronics and home goods in the face of persistently high prices, but the retailer maintained its full-year profit expectations. Target’s first-quarter gross margin rate came in at 26.3%, up from 25.7% a year earlier, driven by lower freight and costs, fewer markdowns and higher retail prices, but partly offset by higher inventory shrink. Target’s first-quarter net income declined nearly 6% to $950 million, compared to $1.01 billion, in the same period last year.
Eugene, Oregon, USA – July 20, 2014: Target location in Eugene, Oregon. Target sells clothing, electronics, food, and household goods. Target is spread throughout the United States with almost 2,000 locations.
Moreover, Target cited theft as a significant factor impacting profitability and projected an additional $500 million in theft-related losses for the current year, adding to the $750 million incurred in the previous fiscal year. The company said it will address the issue through security measures, including expanded security and locked-up items, to avoid store closures that would negatively impact workers and communities. Despite the challenges, Target maintains its full-year profit guidance and plans to invest up to $5 billion this year in store and online improvements, including drive-up return services, store renovations, and enhancements to online shopping experiences.
TGT in the first quarter of FY 23 has reported the adjusted earnings per share of $2.05, beating the analysts’ estimates for the adjusted earnings per share of $1.76. The company had reported the adjusted revenue growth of 0.6 percent to $25.32 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $25.26 billion. First-quarter comparable sales grew by a better-than-expected 0.7%, helped by a 0.9% increase in-store traffic, but digital sales posted a surprise drop. Comparable digital sales declined by 3.4%. Same-day services saw mid-single digit growth, led by high-single digit growth in drive-up. Target said strength in beauty, food & beverage and household essentials offset continued softness in discretionary categories.
During the quarter, the retailer opened six of the 20 new stores it plans to open in 2023. It also began work on more than half of the approximate 175 stores scheduled to undergo full remodels and other enhancements this year.
Target projected adjusted profit between $1.30 and $1.70 per share, below estimates of $1.93 for the current quarter and forecast comparable sales to decline in the low-single digits.