Target-Q1 profit halves due to rising costs | Photo credits: Alex E. Proimos / Creative Commons
May 18 (Reuters) – – Target on Wednesday reported quarterly profit halved by higher prices and warned of the risk of further margin deterioration.
The title of the retail group fell 24% in pre-market trading.
Rival Walmart slashed its full-year profit forecast the day before and its shares recorded their worst day since 1987 on Tuesday.
Both retailers, however, reported higher-than-expected quarterly sales.
“We were less profitable than we hoped or intended to be in the long run,” Target chief executive Brian Cornell said.
“(These costs) continue to grow almost daily and there is no indication yet (..) that they will decrease over time,” he added.
Target said rising fuel and freight spending will add almost $1 billion more than originally projected to its annual spending.
Keeping much of the product affordable helped the company’s same-store sales grow 3.3% in the three months ended April 30, above expectations for an increase of around 0.5%, according to Refinitiv data.
The quarterly turnover thus increased by 4% to reach 25.17 billion dollars (23.93 billion euros).
The company maintained its full-year sales guidance, but expects an operating margin of around 6%, down from 8% or more previously. (Reporting by Aishwarya Venugopal in Bangalore; French version Dina Kartit, editing by Kate Entringer)