Target Shares Plummet Wednesday Despite Positive Earnings
Nov 17, 2021 By MarketDepth
Target (NYSE: TGT) shares plummeted over 5% on Wednesday, despite positive third-quarter earnings. The fall came after the retailer decided to focus on value as inflation continues to impact grocery, fuel and good prices.
Absorbing Higher Costs
According to the company’s CEO, Brian Cornell, Target has opted to absorb some of the higher costs instead of passing it onto customers. Ultimately, the strategy could affect margins.
“We are protecting prices. It’s as important to our guests this year as safety has been throughout the pandemic.”Brian Cornell, chairman and chief executive officer of Target Corporation
The big name retailers’ warning fueled investor concerns that corporations would take the majority of the hit for rising inflation, thus risking potential profits. Retailers often try to raise prices slowly as a means of preserving market share as well as steer clear from big jumps.
Target reported earnings of USD3.03 per share, compared to the expected USD2.83 a share. Revenue amounted to USD25.65 Billion, higher than analysts anticipated USD24.78 Billion.
“The consistently strong growth we’re seeing in our business, quarter after quarter, is a testament to the passion and commitment our team brings to serving our guests, and the trust we’ve built with them as a result.”Brian Cornell, chairman and chief executive officer of Target Corporation
“Following comp growth of nearly 21 percent a year ago, our third quarter comp increase of 12.7 percent was driven entirely by traffic, and reflects continued strength in our store sales, same-day digital fulfillment services and double-digit growth in all five of our core merchandising categories. With a strong inventory position heading into the peak of the holiday season, our team and our business are ready to serve our guests and poised to deliver continued, strong growth, through the holiday season and beyond.