Target Misses Earnings Again
US retail giant Target saw its shares plunge lower at the open yesterday as traders digested a dismal set of Q3 earnings. Target reported an EPS of $1.54, well below the $2.16 the market was looking for. Revenues were slightly higher, at $26.51 billion vs $26.40 billion forecast. The report marks a third consecutive quarter of earnings missed for the group. However, it was Target’s dreary outlook for Q4 and the holiday season which weighed on investor sentiment most.
Lower Outlook For Q4
Target noted that it has seen a significant shift in consumer patterns over the course of the pandemic and the cost-of-living crisis which has followed. CEO Brian Cornell noted “In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty." On the back of these observations, Target has reduced its outlook for Q4 including the typically high demand period leading up to the holidays. The company forecasts a low single digit decline over the quarter when compared with last year.
Changing Consumer Habits
Notable changes in consumer habits have been a key theme among retailers this earnings season. Target also noted that it has seen a stark increase in shoplifting this year. The group noted a more than 50% jump year-on-year so far, with company wide losses over the $400 million mark, again reflecting a consumer reaction to the cost-of-living crisis.
Technical Views
Target
The rally in Target shares off the YTD lows has seen the stock trading up to test the 184.52 level resistance and channel top. This level saw strong selling pressure kicking in with the market turning heavily lower. Price is now bouncing off the channel lows, ahead of a test of deeper support at the 138.80 level. While the channel holds, a further rotation higher is not off the cards though bulls will need to see price quickly back above the 167.38
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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.