Beauty

Target Q3 results disappoint due to ‘significant change in consumer shopping patterns’

THE WHAT? Target is feeling the hit of a slowdown in consumer spending, with its Q3 results falling short of Wall Street expectations. 

THE DETAILS Operating income was US$1.0 billion in third quarter 2022, down 49.2 percent from US$2.0 billion in 2021, driven primarily by a ‘decline in the company’s gross margin rate.’

Comparable sales increased 2.7 percent, slightly beating estimates of 2.51 percent growth, with the company reporting third quarter GAAP earnings per share (EPS) of US$1.54, down 49.3 percent from US$3.04 in 2021.

Q3 2022 net interest expense was US$125 million, compared with US$105 million last year, reflecting higher average long-term debt and commercial paper balances.

THE WHY? Brian Cornell, Chairman and Chief Executive Officer of Target Corporation, cited a ‘challenging economic environment.’

He said: “In the third quarter, our business delivered comparable sales growth of 2.7 percent, and we saw unit share gains across all of our core merchandise categories. This performance demonstrates the durability of our business model which continues to serve our guests and drive loyalty despite the challenging economic environment.

“In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty. This resulted in a third quarter profit performance well below our expectations.”

The company has lowered its topline and bottomline expectations for Q4. 

Target has also announced an ‘enterprise initiative to simplify and gain efficiencies across its business, representing an estimated cumulative savings opportunity of US$2 to US$3 billion over the next three years.’

The post Target Q3 results disappoint due to ‘significant change in consumer shopping patterns’ appeared first on Global Cosmetics News.

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