By Colin Kellaher

 

Shares of Target Corp. slid more than 20% in premarket trading Wednesday after the retailer posted a fiscal first-quarter profit that fell well short of Wall Street's expectations amid unexpectedly high costs.

The Minneapolis company reported net income of $1.01 billion, or $2.16 a share, for the quarter ended April 30, down from $2.1 billion, or $4.17 a share, a year earlier.

Excluding items, Target reported an adjusted profit of $2.19 a share for the quarter. Analysts polled by FactSet, on average, had been expecting adjusted earnings of $3.07 a share.

Target said higher markdown rates, driven largely by inventory impairments and actions taken to address lower-than-expected sales in discretionary categories, weighed on profit, as did costs related to freight, supply-chain disruptions, and increased compensation and headcount in its distribution centers.

Sales rose 4% to $24.83 billion, topping the $24.48 billion Wall Street had been looking for. Comparable sales rose 3.3%, beating expectations for a gain of 0.9%.

Target's earnings miss comes a day after retail titan Walmart Inc. reported disappointing first-quarter results, as higher product, supply-chain and employee costs ate into profits.

Target shares, which closed Tuesday at $215.28, were recently down 21.6% to $168.80.

 

Write to Colin Kellaher at colin.kellaher@wsj.com

 

(END) Dow Jones Newswires

May 18, 2022 07:09 ET (11:09 GMT)

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