12/6/2023 0 Comments Target squeed“We could have held onto excess inventory and attempted to deal with it slowly over multiple quarters or even years. The hit to profit that the retailer took to get rid of the merchandise would lead to longer-term growth, he said. ![]() Without them, shoppers would walk into cluttered stores and associates would have to work around the buildup, Brian Cornell, Target’s chief executive, said. Target’s executives spent nearly an hour at the start of a call with analysts on Wednesday explaining their actions as necessary to ease the burden on its workers and distribution centers. It maintained its forecast for its full-year revenue growth to be in the low- to mid-single-digit range, and for its second-half operating margin to be near 6 percent, suggesting that conditions would improve in the months to come. That’s also a significant drop from a 9.8 percent margin in the same quarter last year. The company’s operating profit margin was 1.2 percent in its latest quarter, below its forecast for about 2 percent, which it had lowered in June. The retailer is still dealing with excess inventory in the current quarter, it said Wednesday, and also faces the industrywide problem of higher freight and transportation costs. Target said it was solving the problem by using discounts and canceling orders for the fall with vendors, which would result in lower profit. As shoppers have curtailed their spending on items deemed discretionary, squeezed by higher-than-usual prices in essential categories like grocery and gas, Target was left with electronics and apparel that people were not buying. It had $15.3 billion in inventory, a 36 percent increase from a year earlier. The lower profit came from Target’s glut of inventory. That was slightly below analysts’ expectation of a 2.8 percent increase. ![]() Target’s comparable sales grew 2.6 percent in its latest quarter, versus the same period last year. That was far below what Wall Street analysts expected, even after the company had warned in recent months that unwanted inventory would dent its earnings. Target’s net profit plunged to $183 million in the three months through July 30, down 90 percent from the year before. Company executives presented the actions as tough but necessary to position the retailer for a stronger performance in the rest of the year. Target posted quarterly earnings on Wednesday that were much weaker than Wall Street expected, as the retailer got rid of excess inventory that built up as shoppers shifted their buying habits.
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