Target falls again, after results below expectations

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( — Target , the American discount retailer, fell sharply before trading on Wall Street after posting a quarterly profit below market expectations. Pressure on margins is therefore confirmed for the brand, with increased promotions. In terms of activity, like-for-like growth was 2.6%. The operating margin rate is only 1.2%, against 2% of ‘guidance’ and 9.8% a year earlier, with actions aimed at reducing excess inventory, as well as increases in freight and transport costs. GAAP earnings per share fell 89% year-on-year to 39 cents. Adjusted EPS is also 39 cents, while total revenue rose 3.5% to $26 billion. Like-for-like digital sales only increased 9%.

Despite the promotions, inventories rose 1.6% at the end of the quarter, compared to the previous quarter, to 15.3 billion dollars. The Minneapolis retailer nevertheless confirmed its intention to return to an annual operating margin of around 6%. However, we remain cautious regarding demand for discretionary products. Management hopes to catch up in the second half, expected to see a strong improvement in terms of profits.


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