Target (NYSE:TGT) on Wednesday said its quarterly profit fell nearly 90% from a year ago, as the retailer followed through on its warning that steep markdowns on unwanted merchandise would weigh on its bottom line.
The big-box retailer missed Wall Street’s expectations by a wide margin, even after the company itself lowered guidance twice.
Yet the company reiterated its full-year forecast, saying it is now positioned for a rebound. It said it expects full-year revenue growth in the low- to mid-single digits. Target also said its operating margin rate will be in a range around 6% in the second half of the year. That would represent a jump from its operating margin rate of 1.2% in the second quarter.
Earnings per share were shown to be 39 cents, far below the expected 72 cents, on revenue of $26.04 billion, compared to the $26.04 billion expected
Target has had a sharp reversal of fortunes over the past two quarters. After posting quarter after quarter of eye-popping sales numbers during the pandemic, it has seen clothing, coffee makers, lamps and more linger on the shelf – and then get kicked to the clearance rack. Some of that excess merchandise is the same stuff that sold out during earlier parts of the pandemic, when shoppers snapped up home decor and loungewear.
The turnabout forced the big-box retailer to cut its profit outlook twice, once in May and then again in June, and to pledge move quickly to get its inventory level to a healthier place.
TGT shares hiked $7.88, or 4.6%,to $180.19.
