Records a staggering fall in target profits. The stock is declining

Wall Street forecasts did not look bad, with the retailer reporting a 52% drop in profits in the first quarter. The company blamed the high costs due to ongoing supply chain disruptions. Consumers are holding back on essential purchases due to widespread inflation.

Shares The goal (Digit) Shares traded down 27% in Wednesday afternoon trading, setting the stock for its worst day since 1987
Target’s bad news dragged the wider market as well. The Dove Fell over 1,100 points or 3.4%. The S&P 500 Decreased by 3.9%. Retailers Dollar tree (DLTR), Dollar General (DG), Tractor supply (TSCO), Costco (Cost) And Buy the best (BBY) One of the biggest losers in the index.
The target’s revenue surprise comes a day after the competitor Walmart (WMT) Shares are the worst day in 35 years. Walmart also posted Poor income and poor vision Due to rising shipping and labor costs. Walmart fell another 7% on Wednesday.

“We faced unexpectedly high costs, driven by a number of factors, and profits were lower than our expectations and lower than we expected to operate over time,” Target CEO Brian Cornell said in a revenue statement Wednesday.

Target shoppers seem to be spending more on everyday essentials like food and beverages and beauty products. Target’s overall sales are up 4% from a year ago, topping analysts’ estimates.

As Prices will rise, Does not use large ticket items such as consumer televisions and fitness equipment. The company noted that “sales were lower than expected in terms of sales” and were forced to write off the value of excess inventory trapped in Target warehouses.

Target shoppers are concerned about “the high and stable inflation they are experiencing, especially food and energy,” Cornell added during a conference call with analysts.

Inflation is a significant problem for many retailers. TJ Maxx and Marshalls owner TJX (TJX) Sold out below Wednesday. TJX also lowered its earnings outlook.

Continuing problems in the supply chain affect retail profits. The goal, like many retailers, is to increase hourly wages in order to attract workers. The company’s high compensation costs for employees in its stores and distribution centers had a knock-on effect on revenue.

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The big retail chains are also struggling with the fact that last year’s revenue was boosted by the government’s federal stimulus checks, which have largely disappeared by 2022.

“We see the decision as disappointing … and we are using the 2021 stimulus, especially in the context of higher costs and weaker option costs,” Stifel analyst Mark Astrachan said in a statement Wednesday morning.

Cornell said in a revenue call that “while we were expecting a post – stimulus recession … we did not anticipate the magnitude of that change.”

However, some retailers have better. Home Depot (HD) Reported Strong sales Thanks to Tuesday, homes continue to boom. Competitor Lowin (Low) It also released earnings that surpassed estimates on Wednesday.

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