Target Q3 profits fall more than 50% YOY
Target Corp.
$150.91
11:10 07/11/24
US retailer Target posted a more than 50% drop in third-quarter profits on Wednesday ahead of the all-important holiday trading period, leading the company to lower expectations for the final twelve weeks of the year.
Target said net income fell by 52% to $712.0m, or $1.54 on a per share basis, even as revenues of $26.52bn beat expectations for a print of $26.38bn. Underlying earnings fell 36% to $1.71bn. Like-for-like sales, on the other hand, rose 2.7% year-on-year, and gross margins printed at 24.7%, lower than the 25.6% consensus estimate.
The Minneapolis-based firm stated sales had fallen as Americans attempted to battle higher prices for groceries, housing and other necessities - a potential warning sign for the coming holiday shopping season. Target also said it had experienced a higher level of shoplifting, with more than $400.0m in losses year-to-date.
Target also projected a drop in comparable sales for the current holiday period, its first decline in five years, stating operating profits will likely contract to about 3% of revenue - roughly half of previous forecasts.
"Based on softening sales and profit trends that emerged late in 3Q and persisted into November, the company believes it is prudent to plan for a wide range of sales outcomes in 4Q, centered around a low-single-digit decline in comparable sales," Target said.
Target cut its top-line and bottom-line forecasts for Q4 but also said it plans to save "a total of $2.0bn-3.0bn over the next three years.
As of 1345 GMT, Target shares had slumped 13.83% in pre-market trading to $154.22 each.
Reporting by Iain Gilbert at Sharecast.com