Target Corporation (NYSE:TGT) stock rose 2.27% (As on November 17, 11:28:09 AM UTC-4, Source: Google Finance) after the company posted mixed results for the third quarter of FY 22. Operating income was $1.0 billion in third quarter 2022, down 49.2 percent from $2.0 billion in 2021, driven primarily by a decline in the Company’s gross margin rate. Third quarter operating income margin rate was 3.9 percent in 2022, compared with 7.8 percent in 2021. Third quarter gross margin rate was 24.7 percent, compared with 28.0 percent in 2021. This year’s gross margin rate reflected higher markdown rates, inventory shrink, and merchandise and freight costs, net of retail price increases, compared with last year. The gross margin rate was pressured by increased compensation and headcount in our distribution centers and the costs of managing early receipts of inventory, with a slight offset from favorable category mix. For the trailing twelve months through third quarter 2022, after-tax return on invested capital (ROIC) was 14.6 percent, compared with 31.3 percent for the trailing twelve months through third quarter 2021. The decrease in ROIC was driven primarily by lower profitability in third quarter 2022.
TGT in the third quarter of FY 22 has reported the adjusted earnings per share of $1.54, missing the analysts’ estimates for the adjusted earnings per share of $2.15, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 3.4 percent to $26.52 billion in the third quarter of FY 22, beating the analysts’ estimates for revenue of $26.36 billion. The comparable sales for the quarter increased 2.7%, surpassing the estimate of 2.3%. The comparable sales growth reflected a 1.4% increase in traffic and a 1.3% increase in the average transaction amount. Comparable store sales grew 3.2%, while comparable digital sales increased 0.3%. Frequency categories, such as beauty, food and beverage and household essentials, drove comparable sales growth.
Additionally, the Company paid dividends of $497 million in the third quarter, compared with $440 million last year, reflecting a 20.0 percent increase in the dividend per share, partially offset by a decline in average share count. The Company did not repurchase stock in the third quarter. As of the end of the third 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.