Target Beating expectations for Wall Street’s profits and sales and reaffirmed its prospects on Wednesday, even if sales and trafficking in its stores and its website has decreased.
However, the retailer based in Minneapolis pointed out to the future – and his emphasis on the return to growth – by appointing his next CEO. The chief of the farm Michael Fiddelke, who was also the Target financial director, will participate in the role on February 1. He will succeed CEO Brian Cornell, who will become executive president of the board of directors of Target. Fiddelke is a 20 -year target veteran.
The shares dropped by around 8% in pre-commercial exchanges following the results and the announcement of the CEO.
During a call with journalists, Fiddelke, 49, described his two decades with society as “an asset”. He said that he knew what the large -scale retailer can be to his best – and what he had to take up – and does not wait before February to make changes.
It has established three priorities: restore Target’s reputation as a retailer with elegant and unique items, offering a more coherent customer experience and using technology more efficiently to operate an effective business.
Beyond the CEO’s announcement, the discounter based in Minneapolis exceeded Wall Street’s expectations in terms of sales and profits during the second tax quarter. He reiterated her annual forecasts, which she had reduced in May. Target said he expects a drop in percentage to a low figure to a sales figure and a profit adjusted by action, excluding gains in disputes, at $ 7 to $ 9.
Here is what Target reported for the three -month period which ended on August 2 in relation to the expectations of Wall Street, according to a survey of LSEG analysts:
- Profit by action: $ 2.05 against. $ 2.03 expected
- Income: $ 25.21 billion against $ 24.93 billion expected
Target’s annual sales have been about four years for four years, and its inconsistent performance has tested the loyalty of buyers and shook the confidence of Wall Street. Store traffic at the Big Box retailer has dropped almost every week since the end of January, according to. Ai, an analysis company that uses anonymized data from mobile devices to estimate global visits to locations. And the actions of the company fell by around 60% compared to their summit of all time at the end of 2021.
Customers and former employees said to CNBC Target had lost some of the unique features that distinguish him from competitors, such as catchy goods, well -maintained stores and attentive customer service. Higher prices have aggravated the challenges of Target because it is important about half of what it sells.
And last week, Ulta Beauty and Target announced that they ended an agreement that opened mini-magasins in beauty in nearly a third of Target stores. The partnership, which also added Ulta’s beauty brands to the Target website, will end in August 2026. Target had spoken of the addition of Ulta Shops as a traffic pilot and a boost to its beauty category.
Fiddelke told journalists that the company “always assesses our partnerships”. He said Target has displayed annual sales growth in his beauty category, excluding Ulta beauty articles every year since 2010, and he is convinced that this can continue.
The last quarter of Target reflected his current difficulties. Its net income fell to $ 935 million, or $ 2.05 per share, compared to $ 1.19 billion, or $ 2.57 per share, in the quarter of the previous year. Revenues increased from $ 25.45 billion during the period of the previous year.
Comparable sales decreased by 1.9% from one year to the next. This metric, also known as sales with comparable stores, includes sales on its website and stores open at least 13 months.
Customer transactions dropped by 1.3% and the average amount that customers spent during these transactions decreased by 0.6% compared to the quarter of the previous year.
Its beneficiary margins have been pressed by higher brand rates, cancellation costs for purchase orders and customers buying more goods in for -profit categories such as wrinkle lines. Hardlines, a category that includes electronics and toys, tends to have weaker margins than other parts of the store such as clothing.
Digital sales were a bright point, up 4.3% from one year to the next.
Target has also displayed gains in parts of its activities outside of retail. Its non-marchandises sales increased by 14.2% compared to the period of the previous year, because it drew more income from its advertising tour, its membership programs and its third-party market.
Target Retail sales trends improved in the first quarter in the second quarter – even if they were still negative, Fiddelke told journalists during a call. He said sales trends in the six key goods categories of Target have improved compared to the previous quarter.
As the leader of the company’s acceleration office, a unit target created in May to direct his turnaround, Fiddelke said he had the chance to look more closely at the company and where she had underperform. For example, he said, the retailer lost land with home goods, a category for which she was known and that exploded in popularity during the cocovio pandemic. He said Target focused too much on “basic” articles and “lost part of our fashion and design leadership that is so important in a category like that”.
But, he said, it has made progress, as by adding Disney and the bedding and decoration on the theme of Marvel in Pillowfort, the Target brand for children’s house items.
“Now we need more of these examples in the category, but they give me a ton of confidence that we are on the right track there,” he said.
