Shares of Target took a nosedive Wednesday after $TGT reported yet another big earnings miss even as revenue beat, as higher markdown rates and a more cautious customer hurt profit and sales trends.
Shares of Target Corp. took a nosedive Wednesday after the discount retailer reported yet another big earnings miss even as revenue beat, as higher markdown rates and a more cautious customer hurt profit and sales trends.
Target’s stock sank 13.7% in premarket trading. It had run up 17.0% over the past four sessions, in anticipation of upbeat results. “In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty,” said Chief Executive Brian Cornell. “This resulted in a third-quarter profit performance well below our expectations.”
Cost of sales increased more than total sales, rising 8.1% to $19.68 billion. The gross margin rate contracted to 24.7% from 28.0%, as higher markdown rates, inventory shrink and higher merchandise and freight costs offset retail price increases.On a bright note, the value of inventory held was $17.12 billion as of Oct. 31, up 14.4% from a year ago. But that marked a sharp improvement from the prior quarter, when inventory was up 36.1% from the year before.
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