- Target Corp TGT reported second-quarter FY22 revenue growth of 3.5% year-on-year to $26.04 billion, missing the consensus of $26.09 billion.
- Comparable sales increased 2.6% on top of 8.9% growth last year.
- The gross margin for the quarter contracted by 890 basis points to 21.5%. The shrink in gross margin was driven primarily by inventory impairments and actions taken to address lower-than-expected sales in discretionary categories.
- Related: Why Target Stock Is Sliding Today
- The operating margin was 1.2%, and operating income for the quarter declined 87% to $321 million. The operating margin rate reflected gross margin pressure from actions to reduce excess inventory and higher freight and transportation costs.
- The company held $1.1 billion in cash and equivalents as of July 30, 2022.
- Inventory at the July end was $15.3 billion, up 10.2% from January end.
- EPS of $0.39 missed the analyst consensus of $0.73.
- The company reduced its inventory exposure in discretionary categories while investing in frequency categories.
- Brian Cornell, chairman and CEO of Target, said, "While these inventory actions put significant pressure on our near-term profitability, we're confident this was the right long-term decision in support of our guests, our team and our business."
- Outlook: Target sees FY22 revenue growth in the low- to mid-single-digit range.
- The company expects an operating margin rate of around 6% in the back half of the year.
- TGT said it is planning cautiously for the remainder of the year.
- Price Action: TGT shares are trading lower by 2.21% at $176.20 in premarket on the last check Wednesday.
- Photo Via Company
TGTTarget Corp
$96.571.32%
Edge Rankings
Momentum
13.54
Growth
26.09
Quality
64.19
Value
79.41
Price Trend
Short
Medium
Long
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