Target stock prices goes in shitter on bad sales report.

You remember, right? Target came out saying it’s OK for men to go into women’s bathrooms.

When we discussed yesterday Reuters’ report that Wal-Mart is now actively “price testing” its products, and squeezing vendors in a scramble to preserve market share while keeping margins relatively flat, we cautioned that this is the latest indication of what appears to be a pervasive “deflationary shock” among the retail industry which is caught in a vicious fight for market share. This morning’s results from Target validated this observation: moments ago the retail giant reported Q4 EPS of $1.45, missing both consensus ($1.51) and the lowest Wall Street estimate ($1.47), even as Q4 revenue came largely in line with expectations of $20.7 billion, suggesting that holiday spending was indeed far worse

The internals were just as messy, with Target reporting comp sales of -1.5%, missing the -1.3% estimate, on gross margin of 26.9%

But the most troubling part of the release was the company’s disappointing guidance: Target now sees 1Q adj. EPS of 80c to $1.00, far below the consensus estimate $1.33, and also over 20% below the lowest firecast (range $1.26-$1.41). The bleeding is expected to continue on the back of a “Low-to-Mid Single Digit Decline” in comp store sales in both Q1 and the full year. Also, for the full year, Target sees adj. EPS of $3.80 to $4.20, wildly missing consensus of $5.34 (range $5.05-$5.60).

CEO Brian Cornell was rather downbeat: “Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores. At our meeting with the financial community this morning, we will provide detail on the meaningful investments we’re making in our business and financial model which will position Target for long-term, sustainable growth in this new era in retail. We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day.”

Cornell concluded that while he is confident the proposed changes will best-position Target for continued success over the long term “the transition to this new model will present headwinds to our sales and profit performance in the short term.”

In other words, expect more of the same from America’s biggest retailers who are now stuck in a fight for market share, even as prices continue to decline, forcing CFOs to come up with increasingly more innovative ways of preserving margins and profits.

At last check, TGT was trading 12% lower after the earnings, wiping out $4 billion in market cap and weighing in on peers such as Walmart.

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  1. bogsidebunny says:

    And the douchebag’s in the Liberal MSM are covering up the “immoral action” by blaming Target’s financial drop on Amazon and other “order-on-the-internet” companies.

  2. I got the same lame excuse from a Radio Shack manager. Allowing perverts into
    girls restrooms is one of those 60 to 80 percent issues that even voters in Mexifornia
    are in the majority!

    Death penalty, illegal immigration, sanctuary cities, crime, terrorism, taxes, and
    unemployment are the reasons the pendulum swung back to the right allowing
    Donald Trump to win.

  3. dekare says:

    retailers beware. I am a conservative, and I believe in voting with my wallet. I made some serious life altering shopping choices because of my beliefs. I used to be a Macy’s patron big time. I would say 90% of my attire came from macy’s. Now, being a lawyer, and a shoe and belt and watch whore, I spent more than the average Macy’s Shoppers. My suits are frequently worn, and I buy new when they start to look less than professional. Same for my shoes. But when Macy’s decided to get rid of Trump, (Of which I own several ties), I got rid of Macy’s. I shop at Kohl’s now. I haven’t spent a dime at Macy’s in years. Now, will macy’s go out of business because of me? I doubt it. Will it hurt their profit margins when me, and hundreds if not thousands of people like me, quit shopping at Mac’s? I bet it’s felt.

    Choices have consequences. I wish retail stores and actors would stay out of politics. I really do hate having to break up with those I once loved. But if they are going to make certain choices that offends me, I am going to respond.

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