Target’s (NYSE:TGT) profit fell by around 50% in its fiscal third quarter as it cleared through unwanted inventory and sales slowed heading into the holidays, prompting the company to lower its expectations for retailers’ most important time of year.
The company also said Wednesday it plans to cut up to $3 billion in total costs over the next three years, citing the need to become more efficient after two years of dramatic sales gains. The retailer’s revenue has grown by about 40% during the COVID pandemic.
Target did not specify how it will reach its savings goal, but said it does not have plans for layoffs or a hiring freeze.
Earnings per share came in at $1.54 vs. the expected $2.13, on revenue of $26.52 billion vs. $26.38 billion expected
The stock closed about 4% higher Tuesday after rival Walmart posted a positive earnings report. Target’s shares were down more than 22% this year and its market value was about $83.38 billion.
Target saw sales decline as families contended with higher prices, making trade-offs between what they need and what they want – a potential warning sign for the holiday shopping season. Target Chief Growth Officer
Christina Hennington said customers’ price sensitivity intensified during the last two weeks of October.
“It was a precipitous decline and, frankly, we’ve seen those trends in the early part of November as well,” she said on a call with reporters.
TGT shares opened Wednesday down $25.14, or 14.1% to 153.84.
