THE WHAT? Target has reported a 52 percent Q1 net profits drop, with quarterly profits halved.
THE DETAILS The company said that it experienced a bigger margin hit due to rising fuel and freight costs, indicating no reprieve from the surging inflation for US retailers.
Comparable sales grew 3.3 percent in the first quarter, reflecting comparable store sales growth of 3.4 percent and comparable digital sales growth of 3.2 percent.
Total revenue of US$25.2 billion grew 4.0 percent compared with last year, reflecting total sales growth of 4.0 percent and a 6.7 percent increase in other revenue.
Operating income was US$1.3 billion in first quarter 2022, down 43.3 percent from US$2.4 billion in 2021, driven primarily by a decline in the Company’s gross margin rate.
THE WHY? Brian Cornell, Chairman and Chief Executive Officer of Target Corporation said, “Guests continue to depend on Target for our broad and affordable product assortment, as reflected in Q1 guest traffic growth of nearly 4 percent.
“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time. Despite these near-term challenges, our team remains passionately dedicated to our guests and serving their needs, giving us continued confidence in our long-term financial algorithm, which anticipates mid-single digit revenue growth, and an operating margin rate of 8 percent or higher over time.”