|
The
bleak results come a day after larger rival Walmart Inc cut its
annual profit view and its shares logged its worst day since
1987, even though both retailers clocked better-than-expected
quarterly sales.
"We were less profitable than we expected to be or intend to be
over time," Target Chief Executive Brian Cornell said.
"These (costs) continue to grow almost on a daily basis and
there is no sign right now...that it is going to abate over
time."
The company predicted annual operating margins to be around 6%
compared to a prior forecast of 8% or higher and said rising
fuel and freight expenses will add nearly $1 billion more than
originally expected in annual cost.
Quarterly gross margin dipped to 25.7% from 30% also because the
retailer was forced to sell some products such as kitchen
appliances and televisions at discounted prices due to weak
demand amid supply-chain pressures.
Many companies are dealing with four decades-high inflation by
raising product prices, but Target has looked to undercut peers
by doing that only for some products.
"(Pricing) continues to be the last lever we pull," finance
chief Michael Fiddelke said. "While we don't like the impact to
our profitability in the short term, we know it is the right
thing to do."
Keeping a large section of its products affordable has helped
Target's revenue grow by 4% to $25.17 billion in the first
quarter.
Target's total net profit fell about 52% to $1.01 billion.
Excluding items, the retailer earned $2.19 per share, well below
market expectation of $3.92.
(Reporting by Aishwarya Venugopal and Uday Sampath in Bengaluru;
Editing by Arun Koyyur)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
