MW Target's stock rocked after triple-miss earnings report amid 'unique' challenges
By Tomi Kilgore
Stock heads for a one-year low, and biggest one-day selloff in more than two years
Shares of Target Corp. took a dive in early Wednesday trading, and were headed for their worst day in more than two years, after the retail giant reported a triple miss for the fiscal third-quarter and provided a downbeat outlook, citing "unique" challenges and costs.
The company $(TGT)$ also reported margins that fell, due to higher digital fulfillment and supply chain costs, which resulted from the costs of managing higher inventory levels and increased digital sales volumes.
"We saw several strengths across the business, including a 2.4% increase in traffic, nearly 11% growth in the digital channel, and continued growth in beauty and frequency categories," said Chief Executive Brian Cornell. "At the same time, we encountered some unique challenges and cost pressures that impacted our bottom-line performance."
The stock plunged 17.4% in premarket trading, which put it on track to open at a one-year low. It was also headed for the biggest one-day selloff since it plummeted 24.9% on May 18, 2022.
Net income for the quarter to Nov. 2 dropped to $854 million, or $1.85 a share, from $971 million, or $2.10 a share, in the same period a year ago. That was well below the FactSet consensus for earnings per share of $2.30.
Total revenue grew 1.1% to $25.67 billion, but was below the FactSet consensus of $25.88 billion, to mark the first top-line miss in five quarters, and the second miss in 11 quarters.
Comparable sales, or sales of stores open at least 13 months, were up 0.3%, which also missed expectations of a 1.5% increase.
Digital comparable sales rose 10.8% as same-day delivery services saw nearly 20% growth.
Gross margin fell to 27.2% from 27.4%, while the operating income margin rate declined to 4.6% from 5.2%.
Looking ahead, the company expects fourth-quarter adjusted EPS of $1.85 to $2.45, versus the current FactSet consensus of $2.65.
The stock, which was set to open at a one-year low, has tacked on 8.8% year to date through Tuesday, while the Consumer Staples Select Sector SPDR ETF $(XLP)$ has gained 11.9% and the S&P 500 index has advanced 24.1%.
-Tomi Kilgore
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November 20, 2024 07:06 ET (12:06 GMT)
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