Target Corp's (NYSE:TGT) first-quarter results were “consistent with our guidance range”, according to the US department store corporation, but the market had a less-than-rosy interpretation.
Shares in the retail giant flopped 7% in Wednesday’s pre-market trading session as investors digested the results.
Earnings per share (EPS) came in at $2.03 compared to $2.05 in the same period last year, although it was the 3.7% decline in comparable sales that likely spooked the market.
Chief executive Brian Cornell put it down to “continued soft trends in discretionary categories”, though heated competition among the budget supermarkets the market is a factor.
Target on Monday said it will cut prices on 5,000 “frequently shopped items” including milk, meat, bread, soda, diapers, paper towels and pet food.
The announcement came just days after Target’s biggest competitor Walmart impressed with its first-quarter earnings.
Walmart said growth over the quarter had primarily been “driven by upper-income households” trading down for its “value-convenience proposition”.
On the bright side for Target, digital comparable sales grew by 1.4%, and same-day services, including Drive Up, grew nearly 9%.
Target's gross margin rate improved by 140 basis points to 5.3% and inventory at the end of the first quarter was 7% lower than the previous year, even as the company maintained higher in-stock levels.