Target Corp. shares plunged in early trading Wednesday after the retailer trimmed its full-year earnings outlook, warning that a flat sales quarter and a buildup in inventory hurt profitability.
Oliver Chen, TD Cowen senior research analyst and retail professor at Columbia Business School, joins BNN Bloomberg to discuss Target and Macy's earnings.
Profit also took a hit after the company stockpiled more products in preparation for the US port strike last month. Holding the additional inventory was more expensive than the company expected, eroding earnings. Target’s Chief Executive Officer Brian Cornell tried to down-play the negative results in a call with reporters, noting that issues like the port strike were a one-time problem and that the company’s early read on holiday sales were positive. He said the company is working to respond to weak demand and offset higher costs, but that it made the right decision to stockpile goods ahead of the port strike just in case it went longer than expected.Comparable sales grew 0.
The results may renew investor concern after Target succeeded in ending a streak of negative sales in the previous quarter, suggesting a recovery was in the works. Target posted a string of weak results amid high interest rates and inflation before showing some success in boosting sales and traffic in the second quarter by offering deals such as $15 bras and price cuts on groceries including milk and bread.
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