Latest news with #MichaelFiddelke
Yahoo
22-05-2025
- Business
- Yahoo
Target and TJX Take Diverging Paths Through Tariff Turbulence—Speed vs. Flexibility
Although Target's 2025 outlook to a hit due to uncertainty surrounding tariffs and consumer spending, the mass merchant is keeping its foot on the gas when it comes to delivery. The retail giant's average click-to-deliver speed was nearly 20 percent faster than the year prior, according to Michael Fiddelke, chief operating officer. More from Sourcing Journal LA Port Director Predicts 'Muted' Peak Season Despite Expected Cargo Surge Target Challenged by Tariffs, Weak Q1 Sales and Profit Miss US Ports Warn of $6.7B Bill if 100% Tariff on China-Made Cranes Kicks in That number doubles the 11 percent faster delivery speeds experienced throughout 2024, in yet another example of national retailers cutting down delivery times on e-commerce orders. Walmart's U.S. operation nearly doubled the number of deliveries it made within a three-hour window from the year prior, the company revealed this month. Fiddelke said in a Wednesday earnings call that faster delivery was one of many factors that contributed to the company's comparable digital sales growth of 4.7 percent. The company touted its same-day delivery capabilities, with the option seeing 36 percent year-over-year growth in the company's first quarter. The growth is an acceleration from the 25 percent annual growth Target's same-day alternative experienced in the prior quarter. Target also saw 'healthy growth' in the Drive Up curbside pickup option, which now accounts for nearly half the retailer's total digital sales. 'We fulfilled more than 70 percent of all Q1 digital orders within a day,' Fiddelke said, also noting that Shipt's driver network fulfilled 24 percent more packages year over year. The talk of same-day services came two days after the company's announcement that it would remove same-day delivery price markups from more than 100 retailers and grocers through the Target Circle 360 paid membership program. Previously, Circle 360 customers would have to pay more for same-day deliveries ordered from Target's network of retailers selling on the Shipt Marketplace, including CVS, PetSmart and Lowe's. The successful delivery growth at Target couldn't save the company from posting largely disappointing first-quarter financial numbers. Net sales dipped 2.8 percent to $23.8 billion in the quarter, reflecting a merchandise sales decrease of 3.1 percent. Total transactions declined 2.4 percent, with same-store sales dropping 3.8 percent. Net income increased 10 percent to $1 billion. But the downward adjustment of its full-year guidance tells a bigger story. Target now expects a low-single-digit decline in sales this fiscal year, compared with a previous forecast of net sales growth of about 1 percent. The retailer said it expects adjusted earnings per share, excluding gains from litigation settlements, to be about $7 to $9, compared with the prior anticipated range of $8.80 to $9.80. CEO Brian Cornell wasn't as overt about tariffs resulting in higher prices as his counterpart at Walmart, Doug McMillon, but he acknowledged it was an option on the table, calling price 'the very last resort.' Cornell said 'adjusting order timing—and where necessary—prices' would be levers to pull to minimize tariff headwinds, alongside negotiating with vendor partners, reevaluating assortment decisions and changing country of production. China is the single largest source of merchandise Target imports, and it accounts for 30 percent of the goods the retailer sells within its private brands. TJX, the off-price retailer operating the TJ Maxx and Marshall's brands, is more confident in navigating the tariff-heavy environment. The company maintained its full-year sales and earnings outlook, with CEO Ernie Hermann saying that TJX expects to offset tariff pressures on both direct and indirect imports. 'We believe we can do this primarily through our buying process and our ability to adjust our ticket while maintaining our value gap and our ability to diversify our sourcing,' said Hermann in an earnings call Wednesday. Hermann said the retailer could potentially see less inventory availability in some categories if vendor wholesalers or traditional retailers cut back on shipments, but the buying team would flow to adjacent value-focused categories in such a scenario. The CEO also indicated that price changes were on the table, but that TJX would ensure it maintains its gap between its prices and those from traditional retailers. 'We believe there's opportunity for us to buy better. If retails do move out there, we will adjust our retails to preserve that gap. That could mean [prices] go up on certain items. If somebody actually adjusts—this is always the case—if they adjusted a retail down, we would do that as well.' China, which had initially been slapped with the highest tariff rate of all countries at 145 percent, has a smaller footprint in TJX's supply chains than many retailers. Hermann said that less than 10 percent of the merchandise that retailer purchases for its U.S. businesses is directly imported from China. Hermann calls that a 'very brand-driven' decision to have 'eclectic, well-balanced' mixes and assortments, rather than any intentional avoidance of the Chinese market. 'We don't swing the pendulum on those places,' Hermann said. 'So that is not something you'd see us play with a lot because obviously, we can move sourcing countries on our direct imports around and we could have China be less of a percentage. But we tend to hover around that 10-percent number.' With that in mind, despite the recent acceleration in freight rates, in which containers from Shanghai to U.S. West Coast ports soared as much as 32 percent in the week ahead of May 16, TJX hasn't felt much of the effect given its small concentration of ocean freight. 'Our ocean freight rates are approximately 20 percent to 25 percent of our overall freight, so we're not as impacted on the ocean freight side,' said TJX chief financial officer John Klinger. 'We have not seen, to the point, costs go up. But again, it's early. The tariffs were just lowered.' As far as China's impact on TJX businesses overseas like U.K. banner T.K. Maxx, Klinger said he has 'nothing significant' regarding shipments out of the country being redirected to Europe instead of the U.S.
Chicago Tribune
21-05-2025
- Business
- Chicago Tribune
Target sales drop in 1st quarter and retailer warns they will slip for all of 2025
NEW YORK — Target's challenge to revive sales and its status as a cheap chic retailer just got more complicated. The discounter announced on Wednesday that sales fell more than expected in the first quarter, and the retailer warned they will slip for all of 2025 year as its customers, worried over the impact of tariffs and the economy, pull back on spending. Target also said customer boycotts did some damage during the latest quarter. The company, long a fierce corporate advocate for the rights of Black and LGBTQ+ people, scaled back many diversity, equity and inclusion initiatives in January after they came under attack by conservative activists and the White House. Target's retreat created another backlash, with more customers angered by the retailer's reduction of LGBTQ+-themed merchandise for Pride Month in June of 2023. Shares fell 3.5% in midday trading Wednesday. Quarterly sales fell 2.8% from last year to $23.85 billion, and that was short of the $24.23 billion Wall Street expected, according to FactSet. Target earned $1.04 billion, or $2.27 per share, for the period ended May 3. That compares with $942 million, or $2.03 per share, in the year-ago period. Target cut its annual sales projections Wednesday. The company now expects a low-single digit decline for 2025 after projecting a 1% increase for sales in March. It also forecast annual per-share earnings of $7 to $9, excluding gains from legal settlements this year. For the year, analysts expect earnings per share of $8.34 on sales of $106.7 billion, on average. Comparable store sales, those from established stores and online channels, fell 3.8%. That includes a 5.7% drop in store sales and a 4.7% increase in online sales. That reverses a comparable store sales increase of 1.5% in the previous quarter. The number of transactions across online and physical stores fell 2.4%, and the average ticket dropped 1.4%. Target said it couldn't reliably estimate the individual impact of each of the factors that were hurting its business. Target is setting up a new office to be led by Chief Operating Officer Michael Fiddelke focused on faster decision-making to help accelerate sales growth. The company said that current Chief Strategy and Growth Officer Christina Hennington is stepping down from her position and will be in a strategic role until Sept. 7. Neil Saunders, managing director of GlobalData Retail, said Hennington had been considered a potential successor to Cornell. 'This is a tacit admission that Target isn't doing a good enough job in some areas, so we welcome it as a potential way to engineer change,' Saunders wrote in a note published Wednesday. 'But we caution that it can only accomplish its goals if the closed and defensive culture at Target changes for the better.' Target is also intensifying efforts to entice customers nervous about the economy. The retailer will offer 10,000 new items starting at $1 — with the majority under $20. 'We're not satisfied with these results, so we're moving with urgency to navigate through this period of volatility,' Target CEO Brian Cornell told reporters on a call Tuesday. 'We've got to drive traffic back into our stores or visits to our site.' Out of 35 merchandise categories that the company tracks, it's gaining or maintaining market share in only 15. The company reported some market share gains in women's swimwear, infant and toddler clothing, and active wear. The latest results underscore Target's ongoing struggle in recent years to revive sales, particularly in nonessentials like fashion and home furnishings, as competition grows more fierce. Back in March, Target had outlined to investors how it was going to bring back its 'Tarzhay' magic— defined by affordable but trendy offerings — by expanding its store label brands and shortening the time it takes to get products to the shelves from conception. That will help the company stay close to trends, company executives said. But it's been a complicated feat even without the tariff trade wars. Target's shares have fallen more than 37% in the past 52 weeks. Target rival Walmart reported strong quarterly sales last week. The nation's largest retailer said it's already raised prices on some items due to tariffs and that more price hikes are on the way this summer when the back-to-school shopping season goes into high gear. For example, car seats made in China that sell for $350 at Walmart will likely cost customers another $100, executives said. Target didn't offer specifics on tariffs' impact on prices, but said that it was looking at different ways to offset those costs like shifting sourcing. It said it should be able to offset the majority of the impacts from tariffs. 'We look at competition,' Cornell told reporters. 'We make adjustments literally each and every week, so we're constantly adjusting pricing. Some are going up. Some will be reduced.' President Donald Trump's threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced May 12, with some of the higher tariffs on pause for 90 days. Walmart was able to dodge some of the tariff damage other retailers are suffering because groceries account for about 60% of its U.S. business. Target is more reliant on discretionary items like clothing and accessories, with less than a quarter of its sales coming from groceries. The company has reduced the number of its store-label products sourced from China to 30% now from 60% in 2017. The company says is on its way to reducing that to 25% by the end of next year. Target is shifting sourcing to Guatemala and Honduras and is looking to sourcing in the U.S. Target is being pressured on other fronts as well. The company in January said it would phase out a handful of DEI initiatives, including a program designed to help Black employees advance their careers and promote Black-owned businesses. Conservative activists and President Trump have sought to dismantle DEI policies in the federal government, schools, and at private businesses. The pastor of a Georgia megachurch who led a nationwide 40-day boycott of Target stores in response called last month for a continuation of that effort. The Rev. Jamal Bryant is seeking a reinvigorated commitment from Target on diversity, and he wants more support from Target for Black-owned banks and businesses. Target operates nearly 2,000 stores nationwide and employs more than 400,000 people.
Yahoo
21-05-2025
- Business
- Yahoo
Target just sent up a giant red flag about the U.S. consumer
High-income U.S. consumers are pulling back. Mortgage applications are down, Walmart (WMT) is reporting grocery gains from monied households suddenly keen for deals on eggs and bananas. And now Target joins a growing list of beloved brands waving the red flag that a recession may be coming. In results released Wednesday, the company reported adjusted earnings per share of $1.30, falling 21% short of analyst expectations, and down from $2.03 a year ago on the same basis. Comparable sales fell 3.8%, with in-store traffic down 5.7%, offset only partially by a 4.7% rise in digital sales. Operating margin compression also loomed large: Target's underlying operating margin was 3.7%, down from 5.3% a year ago when excluding a one-time legal windfall. Margins were hit hard by higher markdowns, plus elevated supply chain and digital fulfillment costs. Bright spots included a breakout Kate Spade (TPR) collaboration (the most successful designer collaboration of the last decade, management said) and a 36% surge in same-day delivery. But even those successes can't obscure clear signs that Target's customer base is fearing – or already feeling – real economic pain. As usual, Target's earnings reflect more than just company-specific issues — functioning as a window into the economic mood of its core American shopper. Target is what's called a 'strongly cyclical' retailer, which means that it thrives when consumer confidence is high and shoppers feel secure enough to spend on things like candles, makeup, throw pillows, and massive Hot Wheels play sets. By extension, Target is often one of the biggest signals of weakening consumer confidence. In tougher times, its middle- and upper-middle-income customer base is often the first to trade down, delay purchases, or skip the trip altogether. Right now, the latter phenomenon is coming to the fore. Compared to Walmart results, the picture becomes even clearer. Walmart, for its part, tends to perform counter-cyclically, benefitting when consumers are wary and hard-pressed, tempted by its low-price dominance and more essentials-heavy mix. In its most recent results posted just last week, the retailer reported grocery gains among households earning over $100,000 — a classic sign of 'trading down.' So it's no wonder that, as recession worries persist and student loan repayments bite, Target's more discretionary-skewed basket is suffering. Target appears to be responding to the challenging macro environment with a reorg, launching an internal 'acceleration office' led by CFO Michael Fiddelke — a seeming signal that executives are under pressure to move faster and get costs under control. The office's purpose is 'enabling faster decisions and execution of its core strategic initiatives in support of a return to growth,' per the earnings release. Whether that means greater company use of AI tools wasn't clear, but if so, it would fit a larger industry pattern. The stress among executives is well understandable, too. Target stock is down almost 30% year to date, and down another 0.5% before Wednesday's bell. While leadership insists the business is fundamentally strong, guidance for full-year sales is now a 'low single-digit decline.' Investors, for their part, seem to be betting on more pain before a turnaround — add that to the list of recessionary signals, too. For the latest news, Facebook, Twitter and Instagram.
Yahoo
21-05-2025
- Business
- Yahoo
Target sales drop in 1st quarter and retailer warns they will slip for all of 2025
NEW YORK (AP) — Sales at Target fell more than expected in the first quarter, and the retailer warned they will slip for all of 2025 year as its customers, worried over the impact of tariffs and the economy, pull back on spending. Target also said that customer boycotts have also done some damage during the latest quarter. The company scaled back many diversity, equity and inclusion initiatives in January after they came under attack by conservative activists and the White House. Target's retreat created another backlash, with more customers angered by the retailer's reduction of LGBTQ+-themed merchandise for Pride Month in June of 2023. Shares fell 3% before the opening bell Wednesday. Sales fell 2.8% to $23.85 billion in the quarter, and that was short of the $24.23 billion Wall Street expected, according to FactSet. Sales are also down from the $24.53 billion the company reported during the same period last year. Target cut its annual sales projections Wednesday. The company now expects a low-single digit decline for 2025 after projecting a 1% increase for sales in March. It also forecast annual per-share earnings of $7 to $9, excluding gains from legal settlements this year. For the year, analysts expect earnings per share of $8.34 on sales of $106.7 billion. Comparable store sales, those from established stores and online channels, fell 3.8%. That includes a 5.7% drop in store sales and a 4.7% increase in online sales. That reverses a comparable store sales increase of 1.5% in the previous quarter. The number of transactions across online and physical stores fell 2.4%, and the average ticket dropped 1.4%. Target said Tuesday that it couldn't reliably estimate the individual impact of each of the factors that were hurting its business. Target is setting up a new office to be led by Chief Operating Officer Michael Fiddelke would focus on making faster decisions to help accelerate sales growth. Current Chief Strategy and Growth Officer Christina Hennington will move into a strategic adviser role. Target is also intensifying efforts to entice customers who are nervous about the economy and inflation. The retailer says it is offering 10,000 new items starting at $1 — with the majority under $20. 'I want to be clear,' Target CEO Brian Cornell told reporters on a call Tuesday. 'We're not satisfied with these results, so we're moving with urgency to navigate through this period of volatility ... We've got to drive traffic back into our stores or visits to our site.' Out of 35 merchandise categories including discretionary and essentials that the company tracks, it's gaining or maintaining market share in only 15, the company said. The company cited that there were some market share gains in women's swimwear, infant and toddler clothing, and active wear. The latest results underscore Target's ongoing struggle in recent years to revive sales particularly in nonessentials like fashion and home furnishings as competition grows more fierce with the likes of Walmart and Amazon. Target's shares have fallen more than 37% in the past 52 weeks. Target rival Walmart reported strong quarterly sales last week. The nation's largest retailer said it's already raised prices on some items due to tariffs and that more price hikes are on the way this summer when the back-to-school shopping season goes into high gear. For example, car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100, executives said. Target didn't offer specifics on tariffs' impact on prices, but said that it was looking at different ways to offset those costs. 'We look at competition,' Cornell told reporters. 'We make adjustments literally each and every week, so we're constantly adjusting pricing. Some are going up. Some will be reduced.' President Donald Trump's threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced May 12, with some of the higher tariffs on pause for 90 days. Yet Americans were already pulling back on spending as they grow increasingly uneasy over the state of the U.S. economy. Companies including toy manufacturer Mattel, toolmaker Stanley Black & Decker and consumer products giant Procter & Gamble have announced higher prices or plans to raise prices because of the trade war kicked of by the U.S. Walmart was able to dodge some of the tariff damage other retailers are suffering because groceries account for about 60% of its U.S. business. Target is more reliant on discretionary items like clothing and accessories, with less than a quarter of its sales coming from groceries. Target has reduced the number of its store-label products sourced from China to 30% now from 60% in 2017. The company is on its way to reducing that number to 25% by the end of next year, the company said. Target is shifting sourcing to Guatemala and Honduras and is looking to sourcing in the U.S. Target is being pressured on other fronts as well. The company in January said it would phase out a handful of DEI initiatives, including a program designed to help Black employees advance their careers and promote Black-owned businesses. Conservative activists and President Donald Trump have sought to dismantle DEI policies in the federal government, schools, and at private businesses. The pastor of a Georgia megachurch who led a nationwide 40-day boycott of Target stores in response called last month for a continuation of that effort. The Rev. Jamal Bryant is seeking a reinvigorated commitment from Target on diversity, and he wants more support from Target for Black-owned banks and businesses. Target earned $1.04 billion, or $2.27 per share, for the period ended May 3. That compares with $942 million, or $2.03 per share, in the year-ago period. Target operates nearly 2,000 stores nationwide and employs more than 400,000 people. Anne D'innocenzio, The Associated Press
21-05-2025
- Business
Target sales drop in 1st quarter and retailer warns they will slip for all of 2025
NEW YORK -- Sales at Target fell more than expected in the first quarter, and the retailer warned they will slip for all of 2025 year as its customers, worried over the impact of tariffs and the economy, pull back on spending. Target also said that customer boycotts have also done some damage during the latest quarter. The company scaled back many diversity, equity and inclusion initiatives in January after they came under attack by conservative activists and the White House. Target's retreat created another backlash, with more customers angered by the retailer's reduction of LGBTQ+-themed merchandise for Pride Month in June of 2023. Shares fell 3% before the opening bell Wednesday. Sales fell 2.8% to $23.85 billion in the quarter, and that was short of the $24.23 billion Wall Street expected, according to FactSet. Sales are also down from the $24.53 billion the company reported during the same period last year. Target cut its annual sales projections Wednesday. The company now expects a low-single digit decline for 2025 after projecting a 1% increase for sales in March. It also forecast annual per-share earnings of $7 to $9, excluding gains from legal settlements this year. For the year, analysts expect earnings per share of $8.34 on sales of $106.7 billion. Comparable store sales, those from established stores and online channels, fell 3.8%. That includes a 5.7% drop in store sales and a 4.7% increase in online sales. That reverses a comparable store sales increase of 1.5% in the previous quarter. The number of transactions across online and physical stores fell 2.4%, and the average ticket dropped 1.4%. Target said Tuesday that it couldn't reliably estimate the individual impact of each of the factors that were hurting its business. Target is setting up a new office to be led by Chief Operating Officer Michael Fiddelke would focus on making faster decisions to help accelerate sales growth. Current Chief Strategy and Growth Officer Christina Hennington will move into a strategic adviser role. Target is also intensifying efforts to entice customers who are nervous about the economy and inflation. The retailer says it is offering 10,000 new items starting at $1 — with the majority under $20. 'I want to be clear,' Target CEO Brian Cornell told reporters on a call Tuesday. 'We're not satisfied with these results, so we're moving with urgency to navigate through this period of volatility ... We've got to drive traffic back into our stores or visits to our site.' Out of 35 merchandise categories including discretionary and essentials that the company tracks, it's gaining or maintaining market share in only 15, the company said. The company cited that there were some market share gains in women's swimwear, infant and toddler clothing, and active wear. The latest results underscore Target's ongoing struggle in recent years to revive sales particularly in nonessentials like fashion and home furnishings as competition grows more fierce with the likes of Walmart and Amazon. Target's shares have fallen more than 37% in the past 52 weeks. Target rival Walmart reported strong quarterly sales last week. The nation's largest retailer said it's already raised prices on some items due to tariffs and that more price hikes are on the way this summer when the back-to-school shopping season goes into high gear. For example, car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100, executives said. Target didn't offer specifics on tariffs' impact on prices, but said that it was looking at different ways to offset those costs. 'We look at competition,' Cornell told reporters. 'We make adjustments literally each and every week, so we're constantly adjusting pricing. Some are going up. Some will be reduced.' President Donald Trump's threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced May 12, with some of the higher tariffs on pause for 90 days. Yet Americans were already pulling back on spending as they grow increasingly uneasy over the state of the U.S. economy. Companies including toy manufacturer Mattel, toolmaker Stanley Black & Decker and consumer products giant Procter & Gamble have announced higher prices or plans to raise prices because of the trade war kicked of by the U.S. Walmart was able to dodge some of the tariff damage other retailers are suffering because groceries account for about 60% of its U.S. business. Target is more reliant on discretionary items like clothing and accessories, with less than a quarter of its sales coming from groceries. Target has reduced the number of its store-label products sourced from China to 30% now from 60% in 2017. The company is on its way to reducing that number to 25% by the end of next year, the company said. Target is shifting sourcing to Guatemala and Honduras and is looking to sourcing in the U.S. Target is being pressured on other fronts as well. The company in January said it would phase out a handful of DEI initiatives, including a program designed to help Black employees advance their careers and promote Black-owned businesses. Conservative activists and President Donald Trump have sought to dismantle DEI policies in the federal government, schools, and at private businesses. The pastor of a Georgia megachurch who led a nationwide 40-day boycott of Target stores in response called last month for a continuation of that effort. The Rev. Jamal Bryant is seeking a reinvigorated commitment from Target on diversity, and he wants more support from Target for Black-owned banks and businesses. Target earned $1.04 billion, or $2.27 per share, for the period ended May 3. That compares with $942 million, or $2.03 per share, in the year-ago period.
