Target Corporation (TGT.US), one of large US retailers, reported earnings for fiscal Q3 2023 today ahead of the Wall Street session open today. While the company managed to beat sales expectations, it missed significantly on profit expectations. Moreover, company gave a gloomy outlook for consumer trends in November-January holiday period, what sent shares over 10% lower in premarket. Let's take a quick look at earnings report from Target.
Headline results: Sales beat but profits miss
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appTarget reported 2.7% YoY increase in fiscal-Q3 comparable sales. While growth was much weaker than 12.7% reported a year ago, it was also better than 2.5% expected by the market. Revenue increased 3.3% YoY to $26.12 billion (exp. $25.97 billion). Company reported a 49% YoY drop in EBIT, to $1.03 billion), and a 36% YoY drop in EBITDA, to $1.71 billion. Operating income was 49% YoY lower at $1.02 billion and significantly below the $1.36 billion median estimate. Adjusted EPS came in at $1.54 (exp. $2.15) and almost halved from $3.03 reported a year ago.
On a positive note, company's reported a 1.3% YoY jump in average transaction amount, meaning that customers are spending more during each visit on average. Market expected average transaction amount to increase 0.2%. Moreover, the number of customer transactions increased 1.4% YoY. Total number of Target stores increased 0.9% YoY to 1,941 but fell short of market estimates (1,950).
Target warns about consumer spending
Target said that trends in consumer spending deteriorated in the final weeks of fiscal Q3 2023, causing company to report disappointing profits for the quarter and setting the stage for a poor final quarter of the fiscal 2023 (November 2022 - January 2023). Company said that those weakening sales and profit trends extended into 2022 and it now expects a low-single digit decline in comparable sales in fiscal Q4. It would be the first decline in comparable sales in 5 years. Target also expects operating profit margin to drop to 3%, down from 3.9% in fiscal-Q3 2023. Company does not plan to engage in mass lay-offs but said it plans to save up to $3 billion by simplifying operations and lowering costs.
Target trades over 11% lower in premarket following a worrying Q4 guidance. Stock tested $180 resistance zone yesterday but failed to break above and is now set to open below $158. A key support to watch can be found in the $150 area and marks the lower limit of a recent trading range. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
