Target reported quarterly earnings ending 10/29/2022 this morning before market open. Revenue was $26.52 billion vs. $26.38 billion expected. EPS was $1.54 vs. $2.13 expected. Target is cutting its fourth-quarter outlook, after seeing sales slow since late October. It plans to increase enterprise efficiency by cutting up to $3 billion in total costs over the next three years. TGT 0.00%↑ tanked after the disappointing results.
In the press release, CEO said:
In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty. This resulted in a third quarter profit performance well below our expectations.
In the conference call, he also mentioned
Clearly it’s an environment where consumers have been stressed. We know they are spending more dollars on food and beverage and household essentials, and as they are shopping for discretionary categories they are looking for promotions.
Basically, people are still buying essentials but will only purchase discretionary items when there are discounts. It appears that our economy is slowing down and consumers are pulling back. It’s unknown how severe things will get. But I suppose the Fed tightening is working and we should brace for further slowdowns in the coming months.