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Target Corporation (NYSE:TGT) shares ticked lower in premarket action after signaling a tougher sales environment ahead.
The retailer reported $2.05 in earnings per share on $24.95B in revenue. Analysts had anticipated $1.76 in earnings per share on $25.35B in revenue. Comparable sales came in flat against a 1.1% growth estimate. Adjusted EBITDA of $2.02B topped the $1.81B expectation.
Additionally, the company noted a 16% year over year inventory reduction as the company sought to rein in the metric and stem promotional activity. First quarter gross margin rate was 26.3% as compared to 25.7% in Q1 2022. That said, the inventory issue as well as retail theft are expected to loom over the company in coming quarters.
“As we look ahead, we now expect shrink will reduce this year's profitability by more than $500M compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue,” CEO Brian Cornell said. “We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We're also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials.”
The company maintained its full-year guide of $7.75 to $8.85 in adjusted EPS for the full year against an $8.47 consensus. Meanwhile, Q2 is expected to proceed slowly, with a range of $1.30 to $1.70 in adjusted EPS expected against a consensus of $1.93 for the quarter.
Shares of the Minnesota-based retailer wavered between down 3% and up 1.5% shortly after the print.
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May 17, 2023 at 05:44PM
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Target issues soft earnings forecast due to inventory, retail theft impacts (NYSE:TGT) - Seeking Alpha
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