It was Walmart yesterday. Now it’s Target’s turn to publish quarterly results that showed sales growth but revenues fell as the company was hit by higher cost of goods, shipping and personnel.
Shares fell 27.6 percent after the company said fuel and shipping costs would be $1 billion more than expected this year. The number of personnel, compensation and production costs also increased. The company said it saw no signs of easing price pressure in the second half of the year.
Target said it hopes it will try not to pass the increased costs on to customers and can sacrifice some short-term profits to gain market share from its competitors. Target’s results and response have undermined the bickering of the Biden administration and Capitol Hill Democrats such as Senator Elizabeth Warren (D-MA) and Bernie Sanders (Ind-VT), whose corporate speculation and price hikes have fueled inflation.
The results also highlight the impact of the ESG energy crisis on the US economy. An investment strategy that primarily focuses on left-wing environmental, social and governance priorities, the so-called ESG investment has helped increase investment in the energy sector, increasing fuel costs in the US and worldwide. In addition, financial regulators, special interest pressure groups and left-wing Democratic lawmakers rely on banks, so it is now very difficult to finance new fossil fuel projects.
In-store sales, which measure online sales and sales in stores that have been open for at least a year, increased 3.3 percent each year. With many Americans shifting some of their purchases back into stores, digital sales rose 3.2 percent, the slowest increase since the start of the pandemic. Walmart reported a similar trend Tuesday. Wall Street forecasts both stores to hold steady or grow just 0.2 percent.
Total sales rose 4 percent to $25.2 billion as consumers spent more on food, games and household goods. Even luggage sales have increased, indicating an increase in travel plans.
However, operating income fell from $2.4 billion to $1.3 billion in the same quarter of 2021. Earnings per share targets were $2.16, down 48% from the previous year. That falls short of Wall Street’s estimate of $3.06 per share.
Total revenue fell from 30% to 25.7% in the same quarter last year. This also reflects pressure from higher discount rates to clean up excess inventory and lower-than-expected sales in certain discretionary categories as customers spend more on essentials. The company was also impacted by higher shipping costs, supply chain disruptions, and increased wage and staffing levels at its distribution centers.
The target lowered its operating margin for the year to the “about six percent” range from its previous estimate of eight percent or more. He maintained his sales guide for the year, reiterating that inflation is putting pressure on the company’s profitability.
Target CEO Brian Cornell said customers are buying fewer small kitchen appliances, items like bikes and TVs than they did during the pandemic. Instead, they’re spending more money on groceries and gift cards, Cornell said, adding that it’s part of getting back to “a more normal life.”
Contrary to Democrats’ claims that corporate greed and price increases are the driving force behind inflation, Target says widespread price increases will be a “last resort” it will use to boost profitability. Some prices have increased, but the company said it’s committed to providing affordability for customers, even at the expense of lower margins.
“While we don’t want the impact on our bottom line in the short term, we know it’s right for our visitors and business in the long term,” said Michael Fiddelke, Chief Financial Officer.
Source: Breitbart
