Target took a big hit from higher costs during the first quarter despite brisk sales and shares appeared headed for their most severe selloff since the Black Monday market crash of 1987.
Profits for major retailers has come under pressure from both surging inflation and stubborn clogs in the global supply chain.
Target’s net income fell roughly 52% from a year ago to $1.01 billion, or $2.16 per share, in the quarter that ended April 30. Per-share earnings adjusted for one time costs were $2.19, far from Wall Street projections of $3.07 a share expected by industry analysts polled by FactSet.
That is also below last year’s first quarter profit of $2.09 billion.
“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time,” CEO Brian Cornell said in a prepared statement.
Things have changed significantly from the environment the company was experiencing just 13 weeks ago, Cornell said, and the company did not project the significant cost increases in freight and transportation.
Those costs will be $1 billion higher this year than the company had anticipated, and Target does not expect those costs to ease this year.
Target’s report follows quarterly results from Walmart Tuesday and there were many similarities between the two, including an early sell-off of stock. Shares of Target pl… (Read more)
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