Target puts up strong third quarter numbers with customers under pressure from inflation
Target has reported better-than-expected profits for its fiscal third quarter, benefiting from its efforts to hold down costs
NEW YORK — Target on Wednesday reported better-than-expected profits and sales in its third quarter, benefiting from efforts to hold down costs. Revenue slipped more than 4%, however, with customers saddled with broadly higher costs as the holiday season nears.
The Minneapolis retailer has been trying to right itself after loading up with too much inventory last summer and was forced to discount heavily to clear it. Costumers have continued to spend, but many are making tough decisions about what they can afford after prices surged for everything from food to gasoline. Prices have moderated, but a bigger chunk of paychecks is needed to cover basics.
Cornell noted that higher interest rates, increased credit card debt and reduced savings rates have left customers with less discretionary income, forcing them to do trade-offs. For example, he said that the chain is seeing more consumers making last-minute purchases on such items as gas. And instead of buying sweatshirts or denim in August or September, they’re now waiting until the weather turns cold.
“It’s clear that consumers have been remarkably resilient,” CEO Brian Cornell told reporters Tuesday. «Yet in our research, things like uncertainty, caution and managing a budget are top of mind.»
Target reported third-quarter profit of $971 million, or $2.10 per share. That compares with $712 million, or $1.54 per share, in the year-ago period. Revenue fell 4.2% to $25.4 billion from $26.52 billion in the year-ago period.
Analysts were expecting a profit of $1.47 per share on revenue of $25.29 billion in the quarter, according to FactSet.
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