Target releases Q3 financial report: poor revenue, profit plummets 52%!

It is learned that on November 16, Target, the second largest retailer in the United States, announced its third-quarter 2022 financial results. Due to declining consumer demand, drastically reduced prices for goods, active inventory clearance and slowing sales growth, Target's profits plummeted 52% this quarter. After the financial report was issued, the company's stock price fell by more than 13%.

According to the financial report, Target's revenue in the third quarter was US$26.52 billion, a year-on-year increase of 3.4%; net income was US$7.12, a year-on-year decrease of 49.1%; adjusted earnings per share was US$1.54, lower than the expected US$2.13.

“American households are struggling with higher prices due to inflation, leading them to take a more cautious approach to spending, which is a significant threat to the holiday season this year,” said Christina Hennington, Target’s chief growth officer. “We saw customers seek out lower prices in the last two weeks of October.”

Target made progress in clearing excess merchandise in the third quarter. Its inventory grew about 14% year-over-year in the quarter, a significant decrease from the first quarter (43%) and the second quarter (36%). But the company's profits were eroded by heavy markdowns, falling to $712 million from $1.49 billion a year ago.

In terms of merchandise sales, Target gained market share in all five of its key merchandise categories. Food and beverage was one of the company's strongest sales categories, with comparable sales increasing by double digits. Essentials saw single-digit growth, driven by pet and health product sales. Beauty products had comparable sales that were flat year-over-year.

Traffic to Target stores and its website grew 1.4% and average order value increased 1.3% in the third quarter, as the company posted record sales for back-to-school, Halloween and more.

"The challenging environment is expected to continue beyond the holiday season into 2023," Target Chief Financial Officer Michael Fiddelke said. Looking ahead, the company expects revenue to continue to face headwinds.

Target also said in its financial report that it plans to cut up to $3 billion in total costs over the next three years to improve operational efficiency, as the company expanded massively during the pandemic due to a surge in revenue (about 40%).

Editor ✎ Nicole/

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