Target (TGT) stock took a nosedive Wednesday after the discount retailer's first-quarter earnings came up short of expectations amid a tough consumer spending environment.
In the three months ended May 4, Target's sales decreased 3.2% year-over-year to $24.5 billion, driven by weak sales in its discretionary categories. Its earnings per share (EPS) declined 1% from the year prior to $2.03.
"Our first-quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter," Target CEO Brian Cornell said in a statement. "Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
While the results met Target's guidance for the quarter, they were mixed when it came to analysts' expectations. According to Yahoo Finance, Wall Street was anticipating in-line sales of $24.5 billion and slightly higher earnings of $2.05 per share.
For the second quarter and full year, Target said it expects EPS in the range of $1.95 to $2.35 and $8.60 to $9.60, respectively. These estimates are in-line with Wall Street's estimates, which currently call for EPS of $2.19 and $9.43, respectively.
Cornell added that the company is pleased with the early results from the relaunch of Target Circle, which brought 1 million new customers to its platform in its first quarter.
Despite the reiterated full-year guidance and upbeat commentary from the company's CEO, it's worrying that "both foot traffic and same-store sales were measurably lower," said Brian Mulberry, client portfolio manager at Zacks Investment Management. "Also, when customers did visit stores they spent 1.9% less. Looking ahead, these consumer trends do not add up to a confident story when it comes to earnings consistency."
Is Target stock a buy, sell or hold?
Analysts are generally upbeat toward the consumer staples stock. According to S&P Global Market Intelligence, the consensus analyst target price for TGT stock is $184.30, representing implied upside of roughly 28% to current levels. Meanwhile, the consensus recommendation is Buy.
BofA Securities analyst BofA Securities analyst Robert Ohmes maintained a Buy rating on the blue chip stock after earnings.
"While near-term sales remain pressured, we believe TGT's focus on value positions it well for share gains going forward," Ohmes says. "Recently announced price investments, changes to the Target Circle 360 rewards program, and several new Owned Brand launches focused on value and entry-level price points should support an improving value perception."
Related Content
-
What You Should Know About Assisted LivingIf you decide that an assisted-living community is right for you or your loved one, take these steps to make sure that its fees, services and quality of care fit your needs.
-
How One Widow Nearly Missed Out on $213,000 in Social SecurityLosing your partner often means losing 30% to 50% of your household income. This financial adviser emphasizes that planning ahead and understanding the rules surrounding survivor benefits can help.
-
How One Widow Nearly Missed Out on $213,000 in Social Security
Losing your partner often means losing 30% to 50% of your household income. This financial adviser emphasizes that planning ahead and understanding the rules surrounding survivor benefits can help.
-
Simple Ways to Make Your Executor's Job Less of a PainBeing an executor of an estate isn't easy, so you should do what you can to help them out. It can be as easy as making a list and being smart about your email accounts.
-
'Trump Accounts' for Newborns: A Great Idea That Could Be BetterAccording to this financial professional, limitations on the proposed $1,000 deposit at birth highlight shortcomings in our retirement landscape, but the potential is there to make a big difference.
-
Stock Market Today: Stocks Chop as Judges Block Then Reinstate TariffsThe Trump administration has asked for and received a stay in a case that seems headed for the Supreme Court.
-
Opportunity Zones Expert Sees Bright Future in 'Big, Beautiful Bill'New legislation introduces rural "super incentives" and expanded access, though a potential investment freeze could stall billions in community development funding. Here's what every investor needs to know.
-
Sorry, But AI Alone Doesn't Cut It for Financial PlanningArtificial intelligence has its place in retirement planning — but only as a tool. It falls short in several key areas that require a human touch.
-
Five Divorce Settlement Blind Spots: An Expert's Guide to What You Can't Afford to MissEven the best lawyers can miss tax and other financial considerations when drafting complex divorce settlements, so specialist advice is vital from the outset.
-
Stock Market Today: Stocks Struggle Ahead of Nvidia EarningsThe three main indexes closed lower as Wall Street awaited the AI bellwether's quarterly results.
