(CercleFinance.com) – Target on Wednesday reported a sharper-than-expected decline in its first-quarter profit, under the effect of inflationary pressures and more frequent use of promotions.
The American distributor reported this morning a net profit just over one billion dollars in the quarter ended at the end of April, against 2.1 billion dollars a year earlier.
Its earnings per share thus reached 2.16 dollars over the past quarter, against 4.17 dollars a year earlier and 3.06 dollars expected on average by analysts.
‘We had to deal with singularly high costs, due to a number of factors, which resulted in a level of profitability well below our expectations, and well below what we hope in the long term, ”recognized its CEO Brian Cornell.
While like-for-like sales increased by 3.3% over the quarter, the operating margin fell dramatically to 5.3% from 9.8% a year ago, due to an increase in promotional operations aimed at selling off unsold items in the non-food departments.
The Minneapolis group also discusses the impact of rising freight costs, supply chain disruptions and wage increases.
The situation should not improve immediately, since Target still expects an operating margin of around 5.3% for the current quarter.
In pre-market quotations, the action fell by more than 22% on Wednesday morning following all these announcements.
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