Shares of Target Corporation plunged 4.78% after the company, yesterday, failed to beat Wall Street’s estimates. Analysts were expecting that the retailer would report earnings per share (EPS) of $1.38, and $22.46 billion in revenues on Tuesday, March 6.
Instead, the company reported a lower adjusted $1.37 EPS, but managed to surpass analysts’ estimates by $300 million, after it posted $22.77 billion in revenues. The company also issued a not-so-positive guidance, stating that its EPS for the current quarter could be between $1.25 and $1.45 per share, with a lower single-digit sales increase.
TGT Earnings & Outlook
Target adjusted Q4 $1.37 EPS is a decline of 5.8% compared to prior-year period’s $1.45 EPS. Nonetheless, sales grew remarkably by more than 4% in January compared to last year’s holiday sales season, representing 3.6% growth for the fourth-quarter against prior year’s 1.4% decline. Gross profit was up 8.6% to $5,976 million, while operating income dropped 14.5% to $1,151 million.
The company has returned $590 million to its shareholders in 2017’s fourth quarter, including repurchasing shares valued at $254 million and paying $337 million in dividends. In the same period, Target still had about $3.71 billion left under its share buyback program of $5 billion.
Target’s CEO Comments
In a move aimed at trumping Walmart, Amazon and other competitors, the retailer recently announced it would increase the minimum wage for its employees to $12. On Tuesday, Brian Cornell, the company’s CEO also reiterated the company’s commitment to increase minimum wage up to $15 per hour by 2020, which will “establish Target as a company of choice.”
He said the company recorded significant spikes in job applications after raising its pay, and improving its employees’ environment. Analysts, however, expressed concerns that the retailer’s labor and remodels investments could limit its sales and earnings trends.
