The scary hand of inflation has consistently found its way into the financial arena of the top performance target.
Target reported broad first-quarter earnings missed Wednesday because costs increased in areas such as freight and inventory, not in contrast to what rival Walmart shared on Tuesday. According to Bloomberg data, profit margins are the first miss since the third quarter of 2018 for target vs. analyst estimates.
Brian Cornell, chairman and CEO of Target, told Yahoo Finance, “We never expected the kind of increase in freight and transportation we see right now.”
Immersed in stock premarket trading.
The target is estimated to see an additional $ 1 billion in freight and transportation costs this year, coupled with record high fuel and diesel prices.
Also, like Walmart, Target has lost its full-year operating profit outlook since the start of the challenging year. The company expects its full-year operating margin to be around 6%. Previously, Target was looking for an operating margin of 8% or more.
Here’s how Target performed better than Wall Street estimates:
Net sales: $ 25.17 billion vs. $ 24.47 billion
Comparable sales: + 3.3% vs. + 1.17%
Total Margin: 25.7% vs. 29%
Management Boundaries: 5.3% vs. 8.13%
Thin EPS: 2.19 vs. 3.07
On a more positive note, Target’s first-quarter comparative sales grew 3.3% on the back of a 3.9% increase in customer traffic. Online comparable sales gained 3.2%.
The company reiterated that it continues to expect lower-to-mid-unit number percent sales growth.
This post has been updated with Target Price Action.
Brian Suzy A great editor and Yahoo is anchored in finance. Follow Suzy on Twitter @ Briansoji And then LinkedIn.
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