Target will release earnings before the bell – here’s what to expect

A sign outside a Target department store on June 07, 2022 in Miami, Florida. Target said it expects earnings to suffer in the near term as it flags junk items, cancels orders and takes aggressive action to get rid of excess inventory.

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Target Wednesday will release its fiscal third-quarter results, as the big-box retailer tries to shed an abundance of extra inventory and woo holiday shoppers.

Here’s what Wall Street expects, according to Refinitiv:

  • Earnings per share: $2.13
  • Revenue: $26.38 billion

Target’s inventory grew 43% year over year in the first quarter and 36% in the second quarter. The retailer cut its outlook twice, first in May and then in June, saying its profits would be hit as it canceled orders and aggressively reduced TVs, small kitchen appliances and more to make room for fresh goods for the back-to-school and vacation season.

This summer, the company also said it would source more in high-frequency categories like food and daily necessities as Americans retreat into other areas like home and apparel.

These actions hurt the company in the second quarter, as profits fell nearly 90%. Still, chief financial officer Michael Fiddelke said the moves would position the company for a stronger half.

Target said in August that it expects full-year revenue growth in the lower to mid-range numbers. It also expects its operating margin rate to rebound and be in a range around 6% in the second half. That would represent a jump from its operating margin rate of 1.2% in the second fiscal quarter.

Target competitor walmart beat Wall Street expectations on Tuesday, saying low-cost groceries appeal to customers at all income levels. The company also showed improvement with its own inventory issues, saying inventory was up only 13% year over year, with most of it coming from inflation.

Target, however, sells a different mix of merchandise. Only 20% of its annual sales come from groceries, compared to Walmart, which derives nearly 56% from the category, according to the two companies’ latest annual reports.

Target is best known for launching and growing fashionable, yet low-cost private labels, such as sportswear brand All in Motion and Hearth & Hand, an in-house brand created with TV stars Chip and Joanna Gaines. . Yet sales in these categories have declined as inflation is at its peak and consumers are once again spending on travel and other services.

It also kicked off holiday sales earlier. Target’s Deal Days began in October, a week before Amazon’s second Prime Day-like sales event. Walmart also hosted a rival event.

Target shares are down more than 22% so far this year, bigger than the S&P 500 index’s 16% drop. Shares closed Tuesday at $178.98, lifting the market value of the company at $83.38 billion.

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