Topline
Target shares roared after the company reported more robust quarterly profits than analysts anticipated, though sales for the retailer remain historically weak and the stock remains badly battered.
Key Facts
In its Wednesday morning earnings report, Target shared its third-quarter profits were about 40% higher than analysts’ forecasts, hitting $971 million
Shares spiked 18% in response, their best day since August 2019.
Despite Wednesday’s surge, Target’s earnings report still showed signs of a company grappling with a downturn, such as posting its worst third-quarter sales since 2021 ($25 billion, down 4% from last year) and a 67% two-year decline in cash on hand.
Target’s stock still reflects the company’s extended slump, as shares are down 14% year-to-date and about 50% from its 2021 all-time high.
Surprising Fact
Though Target’s quarterly sales slightly topped analyst estimates, the company reported its second consecutive quarter of year-over-year sales declines, a dubious milestone after posting 16 consecutive quarters of annual growth.
Key Background
Though there is a broader slowdown in U.S. retail sales as the economy wobbles, Target’s recent revenue decline came as the Minneapolis-based retailer became an unlikely participant in the culture wars as some anti-LGBTQ customers vowed to boycott Target over the company’s Pride Month items. Target pulled the offending merchandise amid backlash, while Target CEO Brian Cornell lamented the “ever-changing operating and social environment” in an August earnings call, vowing to make Target a “refuge” for all. The company’s stock market struggles–which predate the Pride Month acrimony–have been far more severe than peers, such as Walmart (up 17% this year), TJMaxx parent TJX (up 12%) and Ross Stores (up 7%).