Target stock

Consumers also are holding back on nonessential purchases because of rampant inflation. Shares of Target (TGT) plunged 25% in early trading on the news ...

The continued problems in the supply chain are hurting retail profits. The company said higher compensation costs for employees in its stores and distribution centers put a dent into earnings. , consumers aren't splurging on bigger-ticket items, such as televisions and exercise equipment. Target said overall sales for the company were up 4% from a year ago, topping analysts' estimates. The company blamed higher expenses due to continued supply chain disruptions. The retail giant reported a stunning 52% drop in profit for the first quarter, badly missing Wall Street's forecasts.

Target on Wednesday reported quarterly earnings that fell far short of Wall Street's expectations, as the retailer coped with pricey freight costs, ...

One of those factors is the price of gas, which hit a national average of $4.523 per gallon on Tuesday, according to AAA. He said raising prices "continues to be the last lever we pull." Excluding items, Target earned $2.19 per share, 88 cents short of the $3.07 expected by analysts surveyed by Refinitiv. That is on top of a 23% increase in comparable sales in the year-ago quarter and it is higher than Wall Street's projections for 0.8%, according to StreetAccount estimates. Comparable sales, a key metric that tracks sales at stores open at least 13 months and online, grew 3.3% in the first quarter. Walmart reported Tuesday that it also missed on earnings, also citing higher inventory and numerous cost pressures. Luggage sales were up more than 50%, he said. Some others, he said, are seeking out new gaming consoles and patio sets. The national retailer, known for its cheap chic brands of apparel, home decor and more, lapped an especially elevated sales period. The company's shares fell about 27%, hitting a 52-week low. Among the challenges, Target said profits got hit by inventory that arrived too early and too late, compensation and head count that rose at distribution centers, and a mix of merchandise sales that looked different than before. "While we saw healthy top-line growth in the quarter, we were less profitable than we expected to be or intend to be over time," he said on a call with reporters.

Inflation is forcing consumers to alter their spending habits -- and eroding the retailer's profit margins.

Gasoline prices are at record highs above $4.50 per gallon in the U.S. Food and housing costs are also rising. Customers spent less on discretionary items, which forced the retailer to offer more discounts to clear excess inventory. "Guests continue to depend on Target for our broad and affordable product assortment." Higher gas prices are also increasing the cost of shipping goods to customers when they do make purchases. Still, Target believes these macroeconomic issues will eventually subside. Target's gross and operating margins, in turn, fell to 25.7% and 5.3%, respectively, down from 30% and 9.8% in the year-ago quarter.

Inflation always hits the lower-income cohorts hardest and first,” and the latest retail results show how that's playing out, one expert says.

On Tuesday, the U.S. Census Bureau reported retail sales climbed 8.2% on a yearly basis in April to $677.7 billion. Despite the worst inflation rate in 40 years, retail sales have been largely resilient during the pandemic—reaching a record level in 2021 and still going strong this year. In a morning note, market analyst Tom Essaye of the Sevens Report pointed out retail customers are buying less high-margin merchandise (like apparel and electronics) to instead spend more on lower-margin food (like bread and eggs), and also shifting spending away from brand names to cheaper private labels—signs that “consumers are starting to get squeezed by inflation.”

Target shares sank more than 25% in Wednesday trading after a big profit miss and a slowdown in key categories during first quarter.

As a result of the changing consumer environment and inflation, which has reached a 40-year high, Target is focused on value. While the retailer had hoped that volatility would moderate this year, “we don’t see conditions improving right away,” Cornell said. High savings, higher wages, and the employment rate continue to help shoppers, though spending is moving towards travel and other activities that get people out of the house as the world begins to recover from the COVID-19 pandemic. “We believe rising food prices (double-digit inflation), will continue to have an outsized impact on the spending power lower/middle income customers (a core base), making it increasingly difficult for Walmart to maintain its sales/margin trajectory off of its massive $400 billion sales base,” analysts wrote in a Walmart note. Beauty was also strong as Target TGT, -4.79%continues its partnership with Ulta Beauty Inc. ULTA, “While we anticipated a post-stimulus slowdown in these categories, and we expect the consumer to continue refocusing their spending away from goods and into services, we didn’t anticipate the magnitude of that shift.”

Target stock had its worst day since October 1987. This comes as the company reported a much weaker than expected quarter.

"Fuel ran over $160 million higher for the quarter in the US than we forecasted," Walmart's CEO Douglas McMillon said during Tuesday's earnings call. "While it's always the last lever we pull, external conditions led us to raise prices across a broad set of items in multiple categories." "This led us to carry too much inventory, particularly in bulky categories including kitchen appliances, TV's and outdoor furniture." Walmart also cited high fuel prices as a reason for the company's weaker than expected quarter. "While we anticipated a post-stimulus slowdown in these categories...we didn't anticipate the magnitude of that shift," Cornell said. This comes after the company reported much weaker than expected earnings last quarter.

Target shares dropped by 25% after an earnings report that many did not like (that creates a buying opportunity)

He's running Target to win for decades and he's positioned his company to do exactly that. The people who drove its share price down opted to focus on a clearly explainable short-term downturn in profitability. When a potential NFL player runs a 40-yard dash, the people evaluating the performance note the wind conditions. Analysts and more broadly "Wall Street" decided the numbers were bad without really looking at the long term or the company's actual health. Are its CEO's comments accurate and does he or she own up to mistakes or explain when things go wrong. Does the company deliver on its promises?

Stocks are falling after Powell said the Fed will be aggressive at fighting inflation. Walmart and Target stock are suffering from weak earnings.

Trading has been choppy on a daily basis and any data on retailers and consumers are being closely monitored by investors as they try to determine the impact of inflation and whether it will prompt a slowdown in spending. On Tuesday, Fed Chair Jerome Powell told a Wall Street Journal conference that the U.S. central bank will “have to consider moving more aggressively” if inflation fails to ease after earlier rate hikes. All told, more than 95% of stocks in the S&P 500 closed lower. The nation’s largest retailer fell 6.8%, adding to its losses from Tuesday. Target warned that its costs for freight this year would be $1 billion higher than it estimated just three months ago. Target lost a quarter of its value after reporting earnings that fell far short of analysts’ forecasts. Bond yields fell as investors shifted money into lower-risk investments. Stocks have been struggling to pull out of a slump over the last six weeks as concerns pile up for investors. In a sign of the impact of inflation, particularly on shipping costs, Target said its operating margin for the first quarter was 5.3%. It had been expecting 8% or higher. The S&P 500 tumbled 4%, its sharpest decline since June 2020. Apple lost 5.6%, its biggest decline since September 2020. The benchmark index is now down more than 18% from the record high it reached at the beginning of the year.