Target raises annual profit forecast after price cuts boost quarterly sales
By Siddharth Cavale and Ananya Mariam Rajesh
Aug 21 (Reuters) -Target TGT.N raised its annual profit forecast on Wednesday and beat Wall Street expectations for second-quarter comparable sales as more Americans shopped at its stores drawn by low priced groceries and essentials.
The big box retailer now expects 2024 profit in the range of $9.00 to $9.70 per share, up from its prior range of $8.60 to $9.60, as strong sales, cost savings and a leaner inventory helped it log a better-than-expectedperformance in the first half of the year.
Target has expanded its offerings with everyday essentials and private-label food and household items to attract shoppers who are dealing with a rapid rise in grocery prices and interest rates over the past two years.
This summer, the Minneapolis-based chain reduced prices on over 5,000 popular items, including bread, soda, paper towels, and pet food. In February, it introduced a new private-label basics line called 'dealworthy,' with most of the 400 items priced under $10. Additionally, it expanded its 'Good & Gather' and 'Favorite Day' brands by adding 125 new food products.
Target's Chief Executive Officer, Brian Cornell, said shoppers responded to this "newness" and the price cuts.
Apparel sales were also a bright point, turning around from several quarters of sales declines to rise 3% in quarter, led by private-label 'All In Motion' and 'Wild Fable' lines.
Overall, shopper visits rose 3% in the quarter ended Aug. 3 with the strongest comparable sales gains seen in June and July, the company said. This marked a turnaround from the 1.9% traffic decline in the prior quarter.
Traffic drove all of the 2% rise in comparable salesfor the second quarter, even though it saw a slight decline in the average bill spent at the till and the number of items put in carts, the company said.
Analysts' on average estimated a 1.15% rise in comparable sales, according to LSEG.
"We see an incredibly resilient consumer in the face of high inflation and some of the other challenges they've been facing to manage their household budgets," Cornell said on a media call.
Target's report and bigger rival Walmart's WMT.N raising of its annual sales and profit forecasts last week are a sign that the U.S. consumer is strong and could give the Federal Reserve something to think about ahead of planned rate cuts in September.
U.S. retail sales also rose more than expected in July, allaying fears that the U.S. economy was heading towards a recession following signs of a weakening job market.
Target retained its full-year comparable sales forecast of flat to 2% rise, but cautioned that the growth will be skewed to the lower half of the range. Analysts polled by LSEG were expecting a 0.36% rise.
Michael Fiddelke, Target's finance chief, said the company's second-quarter sales exceeded its expectations. However, he expects a moderation in sales growth to about 1% in the third quarter and during the holiday fourth quarter.
Target reported second-quarter earnings on both a net and adjusted basis of $2.57per share. Analysts on an average were expecting $2.18 per share.
Its quarterly gross margin rate was 28.9%, up from 27% last year, in part due to a better grip on inventories and strong sales at its advertising unit, Roundel.
Reporting by Ananya Mariam Rajesh and Savyata Mishra in Bengaluru and Siddharth Cavale in New York, Editing by Nick Zieminski
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
