Target Misses Earnings Forecasts
Shares in iconic US department store Target are trading a little lower ahead of the open today following the release of lifeless Q2 earnings yesterday. The retailer reported EPS of $0.39, undershooting forecasts for a $0.72 result. Revenues were roughly flat at $26.037 billion versus $26.032 billion forecast. This marks the second consecutive quarter of earnings misses for the company and has taken the shine off some of the more positive earnings calls we’ve seen recently.
The breakdown of second quarter performance makes worrying reading for stockholders. Target saw its profits plunging 90% compared with the same quarter a year prior, citing the cost of living crisis as negatively impacting consumer spending habits. The company was forced to use high levels of discounts in a bid to help get rid of elevated inventory levels though still ended the quarter with excess stock.
To put the results in perspective, Target reported net income of $183 million on the quarter versus $1.8 billion a year prior. However, looking ahead CEO Brian Cornell was more upbeat saying that he felt the worst time were behind the company. Cornell told investors: "The high-level story is: The vast majority of the financial impact of these inventory actions is now behind us."
Technical Views
Target
The rally off the 138.80 base has seen Target’s shares trading back above the 167.38 level. However, the rally has stalled into a test of the 184.52 level and with bearish divergence in momentum stocks, risks of a resumed downside move are growing. Should price move back below 167.38, focus will turn back to the YTD lows.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.