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target dropped on Wednesday as the big box retailer chose to focus on value as the prices of groceries, fuel and other goods rise.
The stock closed 4.73% lower at $ 253.80 , despite dProfits exceed expectations for fiscal third quarter.
Target CEO Brian Cornell said on a earnings conference call with reporters that the company is absorbing some of the higher costs that she sees, rather than passing them on to customers. This strategy could reduce margins.
"We are protecting prices ", he said. "It 's as important to our customers this year as safety has been throughout the pandemic.
Target Director of Growth Christina Hennington has acknowledged when calling the pressure on retailer margins as the company tries to move inventory quickly, despite supply chain challenges. She described this as "a suitable long-term investment in the relationship with our clients.
Make sure an increase in holiday sales
Target exceeded expectationsanalysts said sales jumped 13% after shoppers bought Halloween costumes, stocked up on back-to-school supplies and started looking for holiday gifts earlier.
It also raised its fiscal guidance for the fourth quarter, forecasting comparable sales could increase between a high single-digit and low double-digit pace during the holiday season. Previously, it estimated a high single-digit increase.
Here's what Target reported for the fiscal third quarter ended Oct. 30, compared to Refinitiv's consensus estimates:
- Earn per share: $ 3.03 adjusted vs. $ 2.83 expected
- Revenue: $ 25.65 billion vs. $ 24.78 billion
Net income jumped to $ 1.49 billion, or $ 3.04 per share, from $ 1.01 billion, or $ 2.01 per share, a year earlier. Excluding items, the retailer earned $ 3.03 per action, higher than the $ 2.83 per share expected by analysts polled by Refinitiv.
Total revenue increased 13% to $ 25.65 billion from the same period a year ago, slightly above analysts 'expectations of $ 24.78 billion.
Comparable sales in the third quarter rose 12.7% as shoppers made more trips to Target stores and visits to its website. This exceeded the 8.2% increase expected by analysts, according to a StreetAccount poll.
The strongest month of the quarter for Target was August, as parents and students bought pencils, notebooks and more to prepare for a return to in-person learning , CFO Michael Fiddelke said on the call. Its comparable sales fell to around 10% in September and accelerated in October, he said.
Comparative salesIn-store sales grew 9.7%, while digital comparable sales increased 29%. (These metrics rose 9.9% and 155%, respectively, in the last year's quarter.)
Target said sales through its same-day services - which include the curbside pickup service, Drive Up, in-store order pickup called Order Pickup, and Shipt home delivery service - were up nearly 60% in the quarter. This adds up to a growth of over 200% over the period of last year.
As she prepares for vacation buyers, the manager of the operation, John Mulligan, said the company was making long-term investments to prepare. for increased demand and to adapt to new ways in which consumers shop.
Target uses its stores to process almost all of its orders.online, including those collected from the car park and delivered to customers' homes. More than 95% of third-quarter sales were made in its stores.
Mulligan said during the earnings call that the retailer is adding more storage capacity in more than 200 high volume stores, the addition of temporary storage areas to cope with seasonal peaks and the doubling of parking spaces for curbside pickup compared to last year. It also designates parking spaces with numbers to help its employees get online orders for customers' cars faster.
'Key seasonal times '
Cornell said sales were strong throughout the year, but were "punctuated during key seasonal times. " He said he expects this pattern to happen again during the holidays, whilee consumers buy toys, decorations and food.
Target is ready for the holidays, Cornell said. He explained that the retailer has been creative in making sure items get to stores and warehouses on time, despite the clogged ports. It has contracted some of its own ships, unloaded around 60% of its containers during off-peak hours, and sent more of its cargo to less busy ports in Georgia, Virginia or the Pacific Northwest.
This led to an almost 20%, or $ 2 billion, increase in inventories year over year, he said.
Hennington said Target has new attractions that will attract shoppers. He opened Disney and Apple shops inside its stores. Plus, she said, it's now playing on beauty - a popular vacation category - with around 100 Ulta "Beauty at Target boutiques inside its stores and on its website. It will also launch a limited-time collection with Lego in early December with sweatshirts hoodie in bright colors, home items and more.
The Target Has Started his "first holiday deals in early October and promised identical prices for early risers. He said the company was increasing its operations by hiring 100,000 seasonal employees, filling 30,000 new roles in the supply chain and giving about 5 milliThe current staff is working overtime.
"The holiday season has started well, but we have many weeks ahead of us and believe we will continue to see this strength throughout. throughout the holiday season until Christmas Eve, "said Cornell. .
As of Tuesday's close, shares of Target have risen about 51% this year. The stock closed at $ 266.39 on Tuesday, bringing the retailer's market value to $ 130.01 billion.
Read " the company's press release here.