Key points:
- Target reports Q2 earnings before the open Wednesday
- The retailer missed earnings and revenue expectations
- Shares fell over 3% premarket
Target (NYSE: TGT) shares are down premarket after it reported earnings before the open on Wednesday, missing earnings and revenue expectations.
The company posted a profit of $0.39 per share on revenue of $26 billion, missing analyst expectations of a profit of $0.8 per share on revenue of $26.05 billion. Comparable store sales grew 1.3%.
Target shares are down over 3% in premarket trading.
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The company said its operating margin rate of 1.2% reflected gross margin pressure from efforts to reduce excess inventory and higher freight and transportation costs. As a result, it reduced inventory exposure in discretionary categories while investing in rapidly-growing frequency categories.
Target added that its inventory actions put “significant pressure” on near-term profitability.
“I’m really pleased with the underlying performance of our business, which continues to grow traffic and sales while delivering broad-based unit-share gains in a very challenging environment,” said Brian Cornell, chairman, and chief executive officer of Target Corporation. “Looking ahead, the team is energized and ready to serve our guests in the back half of the year, with a safe, clean, uncluttered shopping experience, compelling value across every category, and a fresh assortment to serve our guests’ wants and needs.”
Target reiterated full-year revenue guidance of revenue growth in the low- to mid-single digit range and an operating margin rate of around 6% in the back half of the year.