Target's second-quarter revenue fell short of expectations, and profits plummeted by nearly 90%!

It is learned that on August 17, Target, the second largest retailer in the United States, announced its financial results for the second quarter of 2022. Affected by consumers cutting spending on non-essential items, drastically reducing prices for goods, and actively clearing inventory, the company's profits plummeted by nearly 90% this quarter, far below expectations.

The financial report shows that in the second quarter, Target's revenue was US$26.037 billion, a year-on-year increase of 3.5%, slightly lower than market expectations; net profit was US$183 million, a year-on-year decrease of 89.9%; diluted earnings per share were 39 cents, lower than the market expectation of 72 cents, and far lower than US$3.65 in the same period last year.

Target also reported that its efforts to cut prices had little effect, and at the end of the quarter, it had 1.5% more inventory than three months earlier and 36% more than a year ago. Warehouses were filled with non-essential items, including clothes, coffee makers, cookware, etc.

It is learned that during the epidemic, Target experienced rapid growth and achieved strong performance for 7 quarters, but the company's profits have deteriorated since 2022. Target has seen a sharp drop in profits for two consecutive quarters, and the decline this quarter is higher than that of the previous quarter (40%).

Target Chief Financial Officer Michael Fiddelke said the company must actively clean up inventory, only in this way can it clear up the chaotic inventory, prepare for the upcoming holidays, and survive the economic background shrouded in inflation. Without actively clearing excess inventory, Target can avoid the pain of declining profits in the short term, but its long-term growth potential will be hindered. Although profits fell sharply in the second quarter, the company is still confident about future profits.

Target reiterated its full-year financial forecast, saying it is now positioned for a rebound. The company expects full-year revenue growth to be in the low-to-mid single digits and operating margins to be around 6% in the second half of the year, which would be an improvement from the 1.2% operating margin in the second quarter.

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