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• The retailer saw the largest one-day decline in its shares since the Black Monday crash in 1987
Target Corp (NYSE: TGT) missed quarterly earnings estimates on Wednesday amid rising fuel and freight costs.
Shares of the company slumped more than 25%, its largest one-day decline since the Black Monday crash in 1987.
For the first quarter ended April 30, the retailer posted adjusted earnings of $2.19 a share, missing expectations of $3.07 per share, according to analysts surveyed by Refinitiv.
“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,” said CEO Brian Cornell.
Target said costs will rise by an additional $1 billion for the year, higher than its expectations. The retailer now expects its annual operating margins to be about 6%, down from a previous target of 8%.
With rising inflation, there is a shift in consumer spending as people spend more on essentials rather than discretionary items like television sets and apparel.
The largest retailer of the US, Walmart Inc (NYSE: WMT) also reported lower-than-expected earnings for the first quarter on Tuesday and cut its full-year profit outlook.
Target’s net income fell to $1.01 billion from $2.1 billion a year earlier. Total revenue of the company rose to $25.17 billion in the quarter from $24.20 billion a year ago, above expectations of $24.49 billion.
Target’s market cap fell to about $75 billion on Wednesday from $99.82 billion after the close on Tuesday.
Picture Credits: Reuters
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