Latest news with #TargetCorp.
Miami Herald
3 days ago
- Business
- Miami Herald
Costco defies tariff shifts with higher profit, lower prices
Costco Wholesale Corp. posted better-than-expected earnings in the third quarter, a sign that the nation's largest club chain is flexing its scale and devoted following to navigate tariffs and economic turbulence. The retailer said it generated earnings per share of $4.28 for the quarter ended May 11, above what Wall Street analysts were expecting. The metric suggests that Costco is maintaining profitability even as consumers prioritize necessities to save money. The shares rose 1.5% at 9:37 a.m. in New York trading Friday. Through Thursday's close, the stock had advanced 10% year to date, outpacing the S&P 500 Index. Costco is the latest big-box retailer to post quarterly results, as investors and analysts search for clues on how shoppers are spending. Many consumer-facing companies have posted soft results in recent weeks with Target Corp., Procter & Gamble Co. and Kraft Heinz Co. slashing their annual outlooks. Walmart Inc. and a handful of names have been outliers with strong results. Sweeping, on-again, off-again U.S. tariffs have upended operations across industries, fueling chaos among companies, investors and consumers. Courts are weighing in on whether these tariffs can stay in effect. "We are basing our decisions really based on what we know" and what's in place at the moment, Chief Financial Officer Gary Millerchip said in an interview, adding that Costco hasn't made changes in response to court orders this week as tariffs are still in effect. "It's difficult to make decisions on items that we just don't know what the outcome will be." At Costco, price increases are expected to hit later in the year as the company starts to sell new inventory. It won't be a "one-size-fits-all" scenario, Millerchip said. The retailer is likely to hold prices of some items steady and raise others. Costco may stop selling certain products if they become too expensive, and timing will also vary for items. In addition to working with suppliers, Costco is rerouting goods sourced from countries with high tariffs to other markets, Chief Executive Officer Ron Vachris said on a call with analysts Thursday. About a third of Costco's U.S. sales come from goods imported from other countries. In the U.S., it's sourcing more locally-produced mattresses, pillows and other items. The retailer also pulled forward some summer products such as sporting goods - an effort that helped Costco keep prices low. Amid tariff-driven cost increases, Costco is examining potential price changes on an item-by-item basis, executives said. For example, it held prices of pineapples and bananas - sourced from Central and South America - but raised those of other goods that are more discretionary. 'Full-force ahead' As commodity costs have dropped in recent months, Costco lowered prices of eggs, butter and other key staples. These deals, and expanding hours for gas services, helped its performance. Still, prices of non-food items rose in the low-single digits for the first time in a number of quarters due to imported goods, executives said. "It's full-force ahead on lowering prices where we can," Vachris said. Costco tends to be more resistant to economic volatilities because its customers skew more affluent and pay a fee to shop at its network of more than 800 stores. The company - known for its ever-changing assortment of mega-sized products - has been expanding its popular Kirkland brand and investing in its digital operations. Historically, it has sacrificed short-term profit margins to gain members, drive loyalty and grow business. The company's limited-assortment model and large scale also give it more flexibility on what it sells. Against the backdrop of tariffs, measures of U.S. consumer sentiment have deteriorated during most of the Trump administration on fears of an economic fallout. Spending has generally held up so far, though tariff-driven price increases are starting to hit store shelves. Many companies have signaled that they will be strategic and surgical about price increases, holding down costs of some items and discontinuing other products should they get too expensive. Overall, clothes, electronics and home goods are among the most vulnerable to levies. Costco, which reports monthly sales ahead of earnings, said its comparable sales excluding gas and currency fluctuations rose 8% during the latest quarter. E-commerce sales grew about 16% during the quarter. Traffic to website and stores also rose. Gold, toys and health and beauty items were among top sellers. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Yahoo
22-05-2025
- Business
- Yahoo
Telsey Downgrades Target (TGT) on Persistent Headwinds and Execution Concerns, Cuts PT
Following Target Corp.'s (NYSE:TGT) Q1 results, an analyst from Telsey Advisory downgraded his rating on the shares to Market Perform from Outperform and reduced the price target to $110, down from $130. The broad reasons for the downgrade were partly attributed to the challenging operating environment, including the potential impact of tariffs. Moreover, the analyst pointed to the company's weak execution and a lack of clarity on its growth initiatives. While these issues have been headwinds for some time, the analyst was disappointed by the weak performance in the year's first quarter and the softer guidance for the rest of the year, which dented his confidence in the investment case. Therefore, he turned cautious and downgraded the rating. Ken Wolter / On May 21, the company reported net sales of $23.8 billion for Q1 2025, representing a 2.8% decline year-over-year. Comparable sales, on the other hand, declined 3.8%, with comparable store sales down 5.7%. The decrease was partially offset by comparable digital sales growth of 4.7%. Management also lowered its guidance to a low-single-digit decline in sales, from the earlier guide of 1% growth. Target Corp. (NYSE:TGT) is a general merchandise retailer with nearly 2,000 stores across the United States. While we acknowledge the potential of TGT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TGT and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Target CEO Under Pressure as Boycott, Tariffs Hit Sales
(Bloomberg) -- Pressure is growing on Target Corp.'s chief executive officer after the retailer cut its sales forecast following a sharp pullback in consumer spending and a hit from tariffs and boycotts. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The report sent shares falling and raised questions over Brian Cornell's ability to recapture growth after two years of choppy results — especially as economic turbulence is growing. 'It's a great brand. It's actually a great company. It just looks to us like it needs a new leadership,' said Bill Smead, chief investment officer of Smead Capital Management, which has owned the stock since 2017. Target's current management has struggled to navigate through cultural and political landscapes, Smead said, referring to the backlash around its Pride collection in 2023 and boycott calls after the company decided to halt diversity initiatives this year. It hurts the business to alienate customers, Smead said. He thinks that Target needs to focus more on its strengths and execution during economically challenging times instead of getting caught up in social issues. In September 2022, Target said that Cornell would stay in his job for about three more years. The company said Wednesday that it expects net sales to decline by a low single digit this year, down from previous guidance for an increase of about 1%. In the quarter ended May 3, comparable sales dropped 3.8%, more than analysts had expected, on fewer shoppers. Consumers also spent less per visit. 'I want to be clear that we're not satisfied with these results,' Cornell said during a call with reporters. 'We've got to drive traffic back into our stores and visits to our site.' Target shares fell as much as 7.7% in New York trading. Through Tuesday, the company's stock was down about 27% compared with a 1% increase in the S&P 500. 'The question is how long are investors willing to wait for Target and how much confidence they have in management's strategy to turn around,' said Sheraz Mian, director of research at Zacks Investment Research. Target hasn't been as nimble as competitors in responding to fluctuations in demand. Revenue has declined in five of the past eight quarters. Pressure is growing on Cornell and his team to establish growth strategies, Mian said. Walmart Inc., Target's biggest rival, has been investing in low prices, sprucing up its assortment and remodeling stores. It's also gained market share among wealthier shoppers, who used to be Target's sweet spot. Target executives acknowledged that they're not hitting the mark. Sales jumps during major holidays and limited-time design collaborations help fuel growth and bring people into stores, but the company isn't seeing that same kind of everyday momentum. 'We recognize that we've got to make sure each and every day, we deliver the right products, the right assortment, the right value that brings guests into our stores and our digital sites,' Cornell said. While that trend has hit retailers broadly, Target has been more vulnerable than some of its peers. That's because apparel, home goods and non-consumable items make up about 65% of its sales, while competitors such as Walmart rely on groceries for a larger percentage of revenue. Target has also had trouble with inventory management in recent years amid fluctuations in demand. 'We think it will be more difficult for Target in this environment given tariffs and Walmart's substantial market-share gains,' said Jefferies analyst Corey Tarlowe. Target announced a series of management changes on Wednesday that it said will improve performance. Chief Strategy and Growth Officer Christina Hennington, a Target veteran of more than 20 years and once seen as a potential successor to Cornell, will leave the company. Chief Operating Officer Michael Fiddelke will lead a newly formed group called the 'multiyear acceleration office,' aimed at positioning Target to move faster on growth priorities. The company will also double down on offering trendy, affordable products and convenient shopping experiences, executives said on a call with analysts. The Minneapolis-based company did well during the pandemic but has struggled since then as consumers spend less on clothes, home goods and other non-necessities following years of rising inflation. The worse the economic turbulence gets, the more pressure it puts on Cornell, who was once seen as a retail wunderkind after stints leading large divisions at companies such as Walmart and PepsiCo Inc. Cornell joined as the top executive of Target over a decade ago and streamlined the retailer's operations. He led the company through the pandemic and beefed up digital operations, but Target hasn't been able to generate substantive growth since then. While Target is one of many companies that have dialed back diversity programs following pressure from the Trump administration, it's experienced a bigger backlash than others because it had previously taken a strong public stance in favor of diversity and inclusion. Tariffs represent the latest obstacle. Higher levies on imported goods are expected to raise prices of goods in the near term, resulting in a decline in consumer sentiment and cautious shoppers. Executives signaled that challenges are expected to persist in the coming months. The company is adjusting prices in response to the volatile environment, executives said, without directly linking changes to tariffs — a departure from the company's more direct comments about the levies' effect in March. The retailer is moving to reduce its exposure to China. It's on track to source about 25% of its store brands from China by the end of next year, down from 60% in 2017. Target is also negotiating with suppliers on prices. Home Depot Inc. on Tuesday also struck a more conservative tone about tariffs after Walmart last week said that price increases are coming. Those remarks drew the ire of Trump over the weekend. Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
21-05-2025
- Business
- Yahoo
Target CEO Under Pressure as Boycott, Tariffs Hit Sales
(Bloomberg) -- Pressure is growing on Target Corp.'s chief executive officer after the retailer cut its sales forecast following a sharp pullback in consumer spending and a hit from tariffs and boycotts. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The report sent shares falling and raised questions over Brian Cornell's ability to recapture growth after two years of choppy results — especially as economic turbulence is growing. 'It's a great brand. It's actually a great company. It just looks to us like it needs a new leadership,' said Bill Smead, chief investment officer of Smead Capital Management, which has owned the stock since 2017. Target's current management has struggled to navigate through cultural and political landscapes, Smead said, referring to the backlash around its Pride collection in 2023 and boycott calls after the company decided to halt diversity initiatives this year. It hurts the business to alienate customers, Smead said. He thinks that Target needs to focus more on its strengths and execution during economically challenging times instead of getting caught up in social issues. In September 2022, Target said that Cornell would stay in his job for about three more years. The company said Wednesday that it expects net sales to decline by a low single digit this year, down from previous guidance for an increase of about 1%. In the quarter ended May 3, comparable sales dropped 3.8%, more than analysts had expected, on fewer shoppers. Consumers also spent less per visit. 'I want to be clear that we're not satisfied with these results,' Cornell said during a call with reporters. 'We've got to drive traffic back into our stores and visits to our site.' Target shares fell as much as 7.7% in New York trading. Through Tuesday, the company's stock was down about 27% compared with a 1% increase in the S&P 500. 'The question is how long are investors willing to wait for Target and how much confidence they have in management's strategy to turn around,' said Sheraz Mian, director of research at Zacks Investment Research. Target hasn't been as nimble as competitors in responding to fluctuations in demand. Revenue has declined in five of the past eight quarters. Pressure is growing on Cornell and his team to establish growth strategies, Mian said. Walmart Inc., Target's biggest rival, has been investing in low prices, sprucing up its assortment and remodeling stores. It's also gained market share among wealthier shoppers, who used to be Target's sweet spot. Target executives acknowledged that they're not hitting the mark. Sales jumps during major holidays and limited-time design collaborations help fuel growth and bring people into stores, but the company isn't seeing that same kind of everyday momentum. 'We recognize that we've got to make sure each and every day, we deliver the right products, the right assortment, the right value that brings guests into our stores and our digital sites,' Cornell said. While that trend has hit retailers broadly, Target has been more vulnerable than some of its peers. That's because apparel, home goods and non-consumable items make up about 65% of its sales, while competitors such as Walmart rely on groceries for a larger percentage of revenue. Target has also had trouble with inventory management in recent years amid fluctuations in demand. 'We think it will be more difficult for Target in this environment given tariffs and Walmart's substantial market-share gains,' said Jefferies analyst Corey Tarlowe. Target announced a series of management changes on Wednesday that it said will improve performance. Chief Strategy and Growth Officer Christina Hennington, a Target veteran of more than 20 years and once seen as a potential successor to Cornell, will leave the company. Chief Operating Officer Michael Fiddelke will lead a newly formed group called the 'multiyear acceleration office,' aimed at positioning Target to move faster on growth priorities. The company will also double down on offering trendy, affordable products and convenient shopping experiences, executives said on a call with analysts. The Minneapolis-based company did well during the pandemic but has struggled since then as consumers spend less on clothes, home goods and other non-necessities following years of rising inflation. The worse the economic turbulence gets, the more pressure it puts on Cornell, who was once seen as a retail wunderkind after stints leading large divisions at companies such as Walmart and PepsiCo Inc. Cornell joined as the top executive of Target over a decade ago and streamlined the retailer's operations. He led the company through the pandemic and beefed up digital operations, but Target hasn't been able to generate substantive growth since then. While Target is one of many companies that have dialed back diversity programs following pressure from the Trump administration, it's experienced a bigger backlash than others because it had previously taken a strong public stance in favor of diversity and inclusion. Tariffs represent the latest obstacle. Higher levies on imported goods are expected to raise prices of goods in the near term, resulting in a decline in consumer sentiment and cautious shoppers. Executives signaled that challenges are expected to persist in the coming months. The company is adjusting prices in response to the volatile environment, executives said, without directly linking changes to tariffs — a departure from the company's more direct comments about the levies' effect in March. The retailer is moving to reduce its exposure to China. It's on track to source about 25% of its store brands from China by the end of next year, down from 60% in 2017. Target is also negotiating with suppliers on prices. Home Depot Inc. on Tuesday also struck a more conservative tone about tariffs after Walmart last week said that price increases are coming. Those remarks drew the ire of Trump over the weekend. Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P.
Yahoo
21-05-2025
- Business
- Yahoo
Target Challenged by Tariffs, Weak Q1 Sales and Profit Miss
Target Corp.'s turnaround is taking time as the discount giant contends with changes both within and without. Not only is the company dealing with consumer and supply chain uncertainty from President Trump's start and stop trade war, but it has also been reorganizing — an effort that has now been stepped up. A 'multi-year Enterprise Acceleration Office to drive even greater speed and agility' is being established under chief operating officer Michael Fiddelke and Christina Hennington, chief strategy and growth officer, who is shifting to an advisory role and leaving the company in September. More from WWD How Jaimee Lupton Is Building Mass Beauty Brands for the Next Generation Target Offers 10,000 Summer Items, Free Giveaways and Coastal-inspired In-store Experiences How Digestive Health Company Wonderbelly Is Making Clean Medicine Cool at Mass Retail Meanwhile, first-quarter sales and profits both missed their marks — and the reasons were many. Brain Cornell, chief executive officer, told reporters on a conference call that, 'Headwinds included ongoing pressure in our discretionary business plus five consecutive months of declining consumer competence, tariff uncertainty, and the reaction to the updates we shared on belonging in January' when the company shifted away from its diversity, equity and inclusion initiatives. 'While we believe each of these factors played a role in our first quarter performance, we can't reliably estimate the impact of each one separately,' Cornell said. 'I want to be clear that we're not satisfied with these results and we're moving with urgency to navigate through this period of volatility. We're focused on factors within our control, delivering consistency and reliability and a guest experience that features newness, differentiation and value.' First-quarter net earnings rose 10 percent to $1 billion, or $2.27 a diluted share, with a boost from litigation settlements. But adjusted EPS of $1.30 came in 35 cents below the $1.65 Wall Street analysts forecast. Sales fell 2.8 percent to $23.8 billion in the quarter, where analysts were looking for a much milder 0.75 percent decline. Target said merchandise sales were down 3.1 percent and other revenue increased 13.5 percent. On the brighter side, digital comparable sales grew 4.7 percent, powered by a 35 percent growth in same-day delivery and continued expansion in drive-up pick up. 'Looking ahead, we expect current top line pressures will continue in the near term,' Cornell said. 'Our team is working tirelessly to mitigate the impact of tariffs. As we focus on supporting American families in managing their budgets, we have many levers we can use to mitigate this impact and price is the very last resort.' He said the retailer would stay price competitive by 'leveraging the capabilities, longstanding relationships and scale that sets us apart for many of our retail peers.' While Target is bigger than most retailers, it is still much smaller than Walmart Inc., which last week said it would raise prices due to the trade war. That prompted Trump to lash out, pointing out the billions of dollars Walmart made in profits last year and telling it to 'EAT THE TARIFFS.' Cornell is walking a fine line by not ruling out price increases, but also not leading with them. Other retail CEO's will be watching to see if that approach works. Regardless, the uncertainty ahead has already hit Target's forecast. While the discounter in March forecast adjusted EPS of $8.80 to $9.80, it is now looking for $7 to $9. And sales, which were slated to rise 1 percent, are now forecast to see a low-single digit decline. Rick Gomez, chief commercial officer, said Target's approach still works when the retailer connect with shoppers in the right way. 'Consumers are still making discretionary purchases when they find products at the right intersection of style of quality value,' he said. 'We held or gained share in 15 of the 35 divisions we track with strong gains in apparel categories like women's swimwear, infant and toddler, and performance, as well as seasonal merchandise, books and produce and floral. Additionally, our latest design partnership, Kate Spade for Target proves that newness and style at irresistible price points are a winner in any environment.' The collaboration was hailed as the company's strongest hook-up in a decade. Best of WWD Harvey Nichols Sees Sales Dip, Losses Widen in Year Marred by Closures Nike Logs $1.3 Billion Profit, But Supply Chain Issues Persist Zegna Shares Start Trading on New York Stock Exchange Sign in to access your portfolio
